Patent Docs

Guest Post -- Reconsidered: The Federal Circuit's Enfish Interpretation of Mayo-Alice

By Circuit Judge Paul R. Michel (Ret.) and John T. Battaglia --

The esteemed authors of Patent Docs have written of the need to reconsider the Federal Circuit's approach to section 101 eligibility, given the court's latest expansion and en-banc vote on subject-matter eligibility in AAM v. Neapco (Fed. Cir. July 31, 2020).  Is It Time for Federal Circuit to Rethink Its Subject Matter Eligibility Jurisprudence? by Kevin E. Noonan, Ph.D., Patent Docs (Aug. 24, 2020).  Among other points, we agree that such a need exists and suggest that the first step should lie with correcting the Federal Circuit's decisions in Enfish and Affinity Labs—the precedents that set forth the Federal Circuit's interpretation of "directed to" in the Mayo-Alice "framework" for testing a patent claim's ineligibility.  See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334-35 (Fed. Cir. May 12, 2016); Affinity Labs of Texas, LLC v. DirecTV, LLC, 838 F.3d 1253, 1257-58 (Fed. Cir. Sept. 23, 2016); 35 U.S.C. §101.

To be sure, Enfish was (and largely remains) one of the rare Federal Circuit precedents that upheld the claims' eligibility.  But we are not concerned with particular outcomes; only legal reasoning and an even-handed rule of law.  And Enfish's analysis and resulting rule of law on §101 does not track even the Supreme Court's Mayo-Alice §101 framework, itself fraught with controversy.  More specifically, Mayo-Alice established the two-step "framework" to assess patent-eligibility:  step one asks whether the claim-at-issue "is directed to" an ineligible topic, such as an abstract idea or natural law; and if so, step two asks whether the claim's elements nevertheless add "something more" and demonstrate an "inventive concept" over what was "routine, conventional, or well-understood" at the time.  Alice Corp. Pty Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347, 2355 (2014); Mayo Collaborative Servs v. Prometheus Labs, Inc., 132 S.Ct. 1289, 1298 (2012) (all emphases added unless otherwise noted).

Enfish in particular interpreted Alice's "directed to" language, as used in step one.  With that backdrop, we analyze Enfish's transformation of what was once a one-step eligibility test into a framework that, at both steps of Mayo-Alice, delves into the claim's patentability or "patentable advances."

I.  The Enfish Focus: What Does "Directed to" in Alice Step One Mean?

In Enfish, the Federal Circuit applied the Mayo-Alice ineligibility framework to a patent claiming an improved "self-referential database" design for computers.  822 F.3d at 1333.  Microsoft had successfully challenged these claims as "abstract," persuading the district court to grant summary judgment of ineligibility.  Id. at 1330.  The Federal Circuit panel agreed these claims were sufficiently similar to claims deemed "abstract" in other precedents.  Id. at 1334-35.  But then it turned to the issue that resulted in the Federal Circuit's unique §101 rule:  Namely, the issue of interpreting Alice's step one "directed to" language.

    A.  Enfish Misinterprets "Directed to."

Enfish started well enough.  It rejected the notion that "directed to" meant "involved," since such a broad interpretation would sweep in and put at risk myriad patent claims.  822 F.3d at 1335 ("That formulation plainly contemplates that the first step of the inquiry is a meaningful one, i.e., that a substantial class of claims are not directed to a patent-ineligible concept.  The 'directed to' inquiry, therefore, cannot simply ask whether the claims involve a patent-ineligible concept, because essentially every routinely patent-eligible claim involving physical products and actions involves a law of nature and/or natural phenomenon") (citation omitted) (emphasis in original).

But then Enfish ceased any effort to deconstruct "directed to."  It didn't consider, for example, its own case law, the decisions for which have been using "directed to" for decades before Alice issued.  Nor did it consider how the Supreme Court's pre-Mayo-Alice precedents had applied the eligibility exceptions for §101.  If Enfish had, it would've fairly discerned that "directed to" and variations thereof meant the claim-at-issue was "in practical effect on" or "essentially" on an ineligible topic "itself"—such as the "formula itself" for computing an "updated alarm limit," Parker v. Flook, 437 U.S. 584, 587 (1978), or an "algorithm itself," Gottschalk v. Benson, 409 U.S. 63, 67-72 (1972); accord Diamond v. Diehr, 450 U.S. 175, 182 (1981).  The Supreme Court specifically re-affirmed these precedents in its 2012 Mayo opinion.  132 S.Ct. at 1298, 1302.

    B.  Enfish Relies on Dicta in Alice Step Two to Define the Different Test in Step One.

Enfish took a different approach when interpreting step-one's "directed to" formulation.  Primarily, it latched onto a sentence of dicta at the tail-end of Alice.  In Enfish's reading, this Alice dicta "suggested that claims 'purport[ing] to improve the functioning of the computer itself,' or 'improv[ing] an existing technological process' might not succumb" to the abstract idea exception in step one.  822 F.3d at 1335 (citing "see" Alice, 134 S.Ct. at 2358-59).  Enfish admitted, however, that it was taking this "improved computer" dicta from the Alice Court's discussion on step two (the "inventive-concept" step) in order to define step one (the "directed to" ineligibility step).  Id.  But Enfish had a reason: "While it is true that the Court discussed improvements to computer-related technology in the second step of its analysis in Alice, …, that was because the Court did not need to discuss the first step of its analysis at any considerable length, …."  Id.

    C.  The Bottom Line: How Enfish Changed Alice Step One into a Test That Examines the Claim's     "Patentable Advance" Over the Prior Art.

In sum, the Federal Circuit in Enfish took the following to answer what "directed to" means in Alice's step-one eligibility framework:  (1) a sentence of Alice dicta; (2) on a specific technology ("improvements in computer technology"); and (3) that Alice addressed only when discussing step two's "inventive-concept" test.  Based on those points, Enfish effectively extended Alice to conclude that this step-two dictum was now (1) binding; (2) on all technologies subject to a §101-ineligibility challenge; and (3) applicable to Alice's step-one "directed-to" test.  In doing all this, Enfish transformed Alice step one from a test that asked "whether the claims at issue are directed to" a patent-ineligible concept to the "inquiry [that] … look[s] at the 'focus of the claimed advance over the prior art' to determine if the claim's 'character as a whole' is directed to excluded subject matter."  Affinity Labs, 838 F.3d at 1257-58; accord Enfish, 822 F.3d at 1327, 1335; American Axle & Manufacturing LLC v. Neapco Holdings, --F.3d--, No. 18-1763, at *9 (Fed. Cir. July 31, 2020) (applying Enfish-Affinity Labs' "patentable advance" inquiry to claimed process for manufacturing auto-parts).

II.  Enfish Couldn't Justify Its Step-One "Directed-to" Interpretation By Relying on Alice "Computer" Dicta in Step-Two's "Inventive Concept" Test.

In our view, Enfish cannot reasonably rely on Alice step-two dicta—dicta focused on a specific technology, no less—to fashion what has become the Federal Circuit's across-the-board step-one test.  Dicta is of course non-binding.  And the terse Alice sentence on "computer" technology hardly seems like a sufficient foundation on which to substantially transform the Federal Circuit's step-one inquiry, applicable in all circumstances.

These factors alone should've counseled against Enfish's approach.  Arguably as well, so too should have the differences between Alice's two steps, with one step focused on "ineligibility," the other on an "inventive-concept" test "analogous" to patentability.  Contrast, e.g., SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1163, 1167 (Fed. Cir. 2018) (addressing ineligibility of claimed calculation under Alice and explaining that, no matter how "new" or even ingenious that claimed mathematical calculation might be, it was "still an [ineligible] abstract idea") (emphasis in original) with Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346-48 (Fed. Cir. 2015) (explaining how step two's "inventive-concept" search requires an analysis "analogous to those of § 102 [anticipation] and §103 [obviousness]" and comparing claims to "the prior art").

Moreover, the lone justification Enfish offered for such cross-step borrowing—its belief that Alice simply "didn't need to discuss the first step of its analysis at any considerable length"—seems to rest on speculation.  As we read it, the proper deduction is that Alice didn't discuss this "patentable advance" test (or anything similar) in its step-one eligibility analysis precisely because the Supreme Court doesn't consider such a "patentable advance" relevant to step one.  If anything, "claimed" or "patentable advances" are the stuff of Alice step two, and certainly for the Patent Act's substantive patentability requirements, 35 U.S.C. §§102-103.  But not for Alice step one.

III.  Affinity Labs Solidifies the "Patentable Advance" Inquiry as Part of Step One—Without Discussion or Debate.

Given Enfish's various pressure points, as described above, one would've thought subsequent cases would've tried to limit or distinguish Enfish, whether because it was technology-focused, predicated on dicta in a different step (step two), or otherwise so unique as to be limited to its facts.  See, e.g., Miller v. U.S. Steel Corp., 902 F.2d 573, 575 (7th Cir. 1990) (the "polite formula for overruling").  Not so.  Four months later, in Affinity Labs, the court effectively sealed Enfish's transformation of step one.  838 F.3d at 1257-58.

Conclusion

Whether in Enfish or another imminent case, the Federal Circuit was right to interpret "directed to," as used in Alice step one.  The problem is that Enfish and its subsequent cases (such as Affinity Labs) proceeded to make its "patentable advance" interpretation not just inconsistent with Alice's "directed to" step; but nearly unrecognizable in view of it.  And it is wholly unclear that Enfish did much to stem the ineligibility tide.  After all, a recent study documenting §101 outcomes at the Federal Circuit (in published post-Alice cases) concluded that, regardless of technology or other such distinctions, some 82.1% of claims before the Federal Circuit "succumb" (in Enfish's words) to Mayo-Alice step one.  See Lessons From a Quantitative Analysis of the Federal Circuit's Section 101 Decisions Since Alice, by C. Graham Gerst & Paul Choi, IP Watchdog (Sept. 2, 2020).  Accordingly, as to the Federal Circuit's "patentable-advance" interpretation and the reasoning and process that produced it, patent lawyers should ask the court to revisit and correct this misinterpretation.

Is It Time for Federal Circuit to Rethink Its Subject Matter Eligibility Jurisprudence?

By Kevin E. Noonan --

The Federal Circuit's inchoate attempts to fashion a consistent, rational application of the Supreme Court's recent subject matter eligibility jurisprudence, while understandably Herculean in view of the difficulties inherent in that precedent, raises questions regarding the value of having a "specialized" Circuit Court for the purpose of harmonizing U.S. patent law (see "The Proper Role of the Federal Circuit"; "In Defense of the Federal Circuit: A Response to Judge Wood").  Such sentiments are understandable, particularly in view of the dissension amongst the Federal Circuit judges themselves (see, e.g., "Ariosa Diagnostics, Inc. v. Sequenom, Inc." and "Athena Diagnostics v. Mayo Collab. Servs.").  The most recent example of the fractured nature of the Court on this issue is American Axle & Mfg. v. Neapco Holdings LLC.  The opinions of the Circuit Judges on the question of granting American Axle's request for rehearing en banc is illustrative that these issues will not disappear soon without Supreme Court intervention.  (Whether such intervention would clarify or render the standard even more opaque is itself an open question.)

The Court split 6:6 on whether to grant rehearing, thus denying the request.  Of the Judges denying the request, Judges Dyk, Wallach, and Taranto based their decision not to grant en banc reconsideration squarely on O'Reilly v. Morse (all other precedent cited in their opinion relies on what they consider the proper application of this decision).  In their view, the claims whose invalidation here the panel affirmed (while reversing this determination in the revised opinion as to other claims) suffered under Section 101 by not reciting the specific means by which the scientific principle was applied; this determination was challenged by Judge Moore's dissent in both the original panel decision and the amended decision issued with the Court's decision not to rehear the matter en banc as amounting to a "super-enablement" requirement.

O'Reilly v. Morse was decided in 1853.  In the 167 years since that decision no court (not the Court of Customs and Patent Appeals, the Federal Circuit's predecessor court, no regional Circuit Court of Appeals including the Federal Circuit, not even the Supreme Court) has used the Morse precedent as the Federal Circuit has done in American Axle to support a finding of lack of subject matter eligibility for such claims. The ancient principle that "the exception probes the rule" here works in reverse:  the fact this the decision is an exception is an indication that the rule, fully probed, has been improperly applied in this decision. And Judges Dyk, Wallach, and Taranto provide cold comfort when their opinion against granting rehearing en banc asserts that their opinion is somehow narrow in scope.  As has been seen all too often in subject matter eligibility cases, when the Federal Circuit gives some litigants (and some district courts) a subject matter eligibility inch they take, if not a mile, then at least the next step in expanding the scope of claims that can be held ineligible.

Nor does Judge Chen's agreement with his naysaying brethren (joined by Judge Wallach) convince in stating the judicial equivalent of "nothing to see here, move along."  While the Judge is correct that the application of law to fact in the Section 101 context has always been a case by case judgment, it can also be a misjudgment, the characterization of which can be discerned, inter alia, by the reaction to the decision of other learned judges on the Court.  This decision is clearly terra nova for patent eligibility if only for the reason that six other Federal Circuit judges believe it to have been decided in error.  (While not discounting their views, it is not surprising that Judges Dyk and Taranto agree to not rehear en banc, being the two judges who joined in both the original panel decision and the amended decision; using this calculus four of the judges not on that panel agree with their decision and six at least think that the entire court should rehear the case.)  While the Judge is also correct that O'Reilly v. Morse "remains good law," that is not the issue; the question is whether (as six of his colleagues agree) the failure is in the application of the law by the panel majority.

One other aspect of Judge Chen's decision provides support for the position that the law has been improperly interpreted here.  Judge Chen writes:

If claim 22 had omitted any reference to mass and stiffness, such that the claim simply recited "tuning to match the relevant frequency or frequencies," there would be no basis to say that the claim invokes Hooke's law.

There is at least the following deficiency in this position.  It suggests that a way to obtain a claim to a practical application of a natural law is, no matter what you do, don't inform the public about the law upon which your method is based.  While Hooke's Law is of ancient provenance, that will not always be the case (indeed it may rarely be the case).  And to the extent that the law is interpreted in this way, that interpretation, and not permitting patenting of claims depending on a natural law, is the Constitutionally infirm position because it is directly contrary to "promoting progress."  This statement also is reminiscent of the U.S. Patent and Trademark Office's valiant but failed attempt to circumvent the Federal Circuit's Sequenom decision by setting a standard whereby a claim directed to merely detecting a natural law, without reciting the application of that natural law in providing a diagnosis, was patent eligible.  The Federal Circuit overruled that attempt ("properly" in view of the Sequenom decision) in Cleveland Clinic Foundation v. True Health Diagnostics LLC and at the same time rejected reliance on the Office's expertise for the sake of "the need for consistent application of our case law."

Judge Newman's dissent from denial of rehearing en banc, joined by Judges Moore, O'Malley, Reyna, and Stoll illustrates (albeit not as forcefully as Judge Moore's dissent from the panel decision) the state of the Court's doctrinally incoherent precedent.  (Respectfully, Judge Reyna's presence on this dissent speaks volumes about the serious questions raised by the panel majority's decision, if only to the extent that rehearing en banc is warranted.)  Judge Newman's views and concerns regarding the Court's subject matter eligibility decisions echo her dissent in Athena; she states "[t]he court's rulings on patent eligibility have become so diverse and unpredictable as to have a serious effect on the innovation incentive in all fields of technology" and her concern remains that "[t]he victim is not only this inventor of this now-copied improvement in driveshafts for automotive vehicles; the victims are the national interest in an innovative industrial economy, and the public interest in the fruits of technological advance."

The opinions of the Federal Circuit judges that denied rehearing en banc are not consistent with Supreme Court precedent to the extent that the Court recognized and cautioned that invalidation or denial of patent eligibility based on an overbroad application of Section 101 posed significant risks to innovation:

At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law.  . . .  At some level, "all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas."  . . .  Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept.  . . .  "[A]pplication[s]" of such concepts " 'to a new and useful end,' " we have said, remain eligible for patent protection.  . . .  Alice Corp. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014) [some citations omitted].

Judge Newman's dissent recognizes these principles, citing Le Roy v. Tatham, 55 U.S. 156 (1852), that "[a]ll technology is based on scientific principles—whether or not the principles are understood" and that "[t]he Court then and now understood the distinction between the basic principles of science and their practical application."  Her dissent also cites many of the cases following from O'Reilly v. Morse cited by her brethren denying rehearing en banc but distinguishing them in ways they do not, based on principles versus their application.

Judge Stoll writes (joined by Judges Newman, Moore, O'Malley, and Reyna again), specifically challenging her colleagues' argument that what Judge Moore in her dissent from the panel opinion and the amended opinion characterizes as the "nothing more test" is consistent with O'Reilly v. Morse.  Indeed, Judge Stoll questions Judge Chen's reliance on the Morse precedent, stating:

I note that Judge Chen does not identify any prior court opinions or articles that specifically refer to an "O'Reilly test," nor am I aware of any.  To the extent that the Supreme Court has cited O'Reilly, it has been for the general propositions that there is an implicit exception to § 101 and that preemption is an important concern in patent law.

And with regard to the "how to" aspect of the majority's opinion, Judge Stoll writes:

Even assuming that claim 22 applies Hooke's law (or any other unnamed law of nature), the claim seems sufficiently specific to qualify as an eligible application of that natural law.  The claim identifies specific variables to tune, including "a mass and a stiffness of at least one liner."  . . .  It requires that the tuned liner attenuate specific types of vibration, including "shell mode vibrations" and "bending mode vibrations," and further requires that the tuned liner is inserted in a "hollow shaft member."  . . .  With this level of specificity, claim 22 appears to be properly directed to "the application of the law of nature to a new and useful end," not to the law of nature itself.  Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948) (collecting cases).  Yet this level of detail is insufficient in the majority's view, and it remains unclear how much more "how to" would have been sufficient to render the claim eligible under the majority's approach [citations to the record omitted].

Judge Stoll is also properly concerned with how far the Court has strayed from traditional principles of patent eligibility:

The majority invokes § 101 to hold ineligible a method for manufacturing a drive shaft assembly for a car—a class of invention that has historically been patent eligible.  See, e.g., Diehr, 450 U.S. at 184 ("Industrial processes . . . have historically been eligible to receive the protection of our patent laws.").  In my view, the result in this case suggests that this court has strayed too far from the preemption concerns that motivate the judicial exception to patent eligibility.  The claims at issue here are far removed from the canonical ineligible claim that "simply state[s] the law of nature while adding the words 'apply it.'"  Mayo, 566 U.S. at 72 (citing Gottschalk v. Benson, 409 U.S. 63, 71–72 (1972)).  Indeed, the claims at issue do not recite any particular law of nature, much less preempt the use of Hooke's law in any particular context.  Instead, they are directed to a specific "method for manufacturing a shaft assembly" with a liner that attenuates certain types of vibrations.  '911 patent col. 11 ll. 24–36.  Even assuming that Hooke's law is required to tune the claimed liner (despite not being mentioned anywhere in the specification or claims), so are innumerable other laws of nature.  And there remain innumerable ways to apply Hooke's law to achieve the goal of mitigating problematic vibrations in a shaft assembly—perhaps, for instance, by using something other than a liner tuned to attenuate at least two different kinds of vibrations.

After all, Judge Stoll notes that as one amicus posited, "the majority's original approach would have placed the combustion engine at risk of ineligibility—a proposition that would have seemed absurd just a few years ago, but now seems eerily plausible. . . one can still reasonably ponder whether foundational inventions like the telegraph, telephone, light bulb, and airplane—all of which employ laws of nature—would have been ineligible for patenting under the majority's revised approach" (see, e.g., "Federal Circuit Finds Calculating Machine Ineligible"; "Federal Circuit Invalidates Edison's Light Bulb Patent"; "Federal Circuit Invalidates A. G. Bell's Telegraphy Patent").

All these are ample reasons, for Judge Stoll and in a more rational age anyone conversant in patent law to believe rehearing en banc is warranted.

Finally, Judge O'Malley writes in dissent (joined by Judges Newman, Moore, and Stoll) based on her view that the panel majority, in both their original and amended opinion, transgressed the procedural standards advocated by The Advisory Committee on Appellate Rules pursuant to a letter to all Circuit Courts of Appeal from the American Academy of Appellate Lawyers.  The majority's rulings in her view were subject to the following procedural defects:

(1) it announces a new test for patentable subject matter at the eleventh hour and without adequate briefing; (2) rather than remand to the district court to decide the issue in the first instance, it applies the new test itself; and (3) it sua sponte construes previously undisputed terms in a goal-oriented effort to distinguish claims and render them patent ineligible, or effectively so.

These are enough, in Judge O'Malley's view, to merit rehearing en banc.

The answer to the question posed in the title is clearly "yes" but it is good to consider why it should be done (and soon).  There is a principle in rhetoric of reductio ad absurdum, that you can probe whether a logical argument is flawed by taking it to its extreme and seeing whether the outcome is ridiculous.  The American Axle decision is a good illustration of the application of this principle by the Federal Circuit (no matter how unintentional or unrecognized by at least half of the judges).  While it is but a faint hope, the trend is somewhat positive:  in Sequenom the vote to deny rehearing en banc was 8 to 4; in Athena it was 7 to five, and in American Axle it was 6 to 6.  Like a lifeline, the opportunity to revisit if not reverse the Federal Circuit's trend to affirm invalidating granted patents under Section 101, no matter how absurd the outcome, is the only one that might compel the Supreme Court to clarify its position on subject matter eligibility.  Nothing in the Court's decisions has mandated the lengths to which the district courts have applied this section of the statute, nor compelled the Federal Circuit to affirm against the better judgment of an increasing percentage of its judges.  To the extent that several of those judges have stated in their opinions that they are compelled by the Supreme Court's recent decisions to apply the law as they have applied it, they have at the same time ignored the Court's admonition that it is up to the inferior courts to apply the law in light of the broad proscriptions in their decisions to (like Blackstone) probe the contours of what the law commands.  The failure to do so has provided no impetus for the Court to reconsider its own decisions or to correct any over-application of them to cases that they did not consider (American Axle being the latest and most egregious of these).  The Federal Circuit, a court created to apply its specialized expertise (an expertise recognized by the Supreme Court; see Warner Jenkinson Co. Hilton-Davis Chemical Co., 520 U.S. 17 (1997), and other cases), owes it to its institutional integrity (and to the rest of us) to give the Court the opportunity to do so.  After all, if the front page of The Wall Street Journal one day runs the headline "Court Destroys American Industry," shouldn't that court be the Supreme Court?

Federal Circuit Finds Calculating Machine Ineligible

August 23, 1891

WASHINGTON, DC

In a unanimous panel ruling, the Federal Circuit has found that the calculating machine of U.S. Patent No. 388,116 fails to meet the eligibility requirements of 35 U.S.C. § 101.  Inventor W.S. Burroughs of St. Louis described the machine as "mechanically assisting arithmetical calculations."  Particularly, it includes "one or more registers, of a series of independent keys and intervening connections constructed, arranged, and operating, as fully specified hereinafter, so as to indicate upon the register the sum of any series of numbers by the proper manipulation of the keys, and also so as to print or permanently record the final result."  But this device ran afoul of recent Federal Circuit case law regarding the so-called "abstract idea" exception to patentability.

In a challenge brought by a potential licensee, the Court was asked to review the validity of the '116 patent.  While the Court agreed with the U.S. Patent and Trademark Office's ultimate conclusion that the claimed invention was novel and non-obvious, it found that the Office did not apply the § 101 test strictly enough during prosecution.

At play was claim 1, which recites:

The combination of a series of numbered independent indicators, a series of independent keys to each indicator, connections between each of the series of keys and each indicator, said connections being arranged to insure the movement of each indicator upon the movement of any key of its series and including a series of stops to each series of keys adjustable by but independent of the keys, arranged to vary the extent of movement of the indicator according to the position of the key struck, substantially as described.

The Court began its analysis by stating that "under § 101 we first determine the focus and character of claim, including the problem that it purports to solve."  Here, the Court found that the '116 patent addresses the summing of numbers through the mathematical operation of addition.  The Court observed that such simple arithmetic functions have been performed by hand and with assistance by machines for thousands of years.  For instance, "the first abacus was introduced no later than 2700 B.C. to perform sums as well as to store partial results of more complex operations -- clearly addition had previously been performed by humans in their minds or in writing prior to that."  Thus, the Court viewed the invention as being directed to an abstract idea.  Or, in the Court's words, no more than "a longstanding principle or an idea of itself."

More specifically, the Court wrote that "the claim is directed to a fundamental concept of the sort that could be performed mentally; that is, a person, armed with paper and pencil, could perform the claimed operations."  The Court also found claim 1 to lack specificity, using result-oriented language that "recites what the inventor hopes to achieve without reciting how the inventor purports to have achieved that goal."  In particular, the arrangement of connections and the positions of the series of stops were "claimed so broadly as to encompass the mere idea of their functionality and not a specific implementation thereof."

Burroughs argued that the invention of the '116 patent was a technical improvement in that it "eliminated painstaking and error-prone manual calculations required to sum a list of numbers."  But the Court disagreed, stating that "we have held many times in the past that automating an activity previously performed manually is not in and of itself patentable, even if said automation produces a faster and more accurate result."

Moving on, the Court looked to the remaining elements of the claim to determine whether it included an inventive concept -- something significantly more than the abstract idea that constituted a practical application of that idea.  It found that the additional elements of claim 1, indicators, keys, connections, and stops, were all well-understood, routine and conventional components claimed at a high level.  The Court concluded that "considering the elements of the claim both individually and as an ordered combination, they recite no additional parts or steps that would suffice to transform the nature of the claim into a patent-eligible application."

Burroughs argued that claim 1 recited several inventive concepts that were neither previously known, nor conventional or routine.  But the Court found his position lacking, and instead reasoned that:

Mr. Burroughs argues that his invention is an improvement in tallying sums.  As we noted earlier, that is no more than an abstract notion.  Our case law makes clear that improvements that are abstract themselves do not render a claimed abstract idea eligible for patent protection.  Furthermore, since the claim at hand merely recites the achievement of a result -- a result that has previously been achieved in a similar manner for most of written history -- the Burroughs machine is not the type of invention that patent law is intended to protect.

Consequently, the Court held that '116 patent invalid under § 101, and Mr. Burroughs must return to the proverbial drawing board.

The above is a sarcastic parody; our earlier sarcastic parodies can be found here:

• "Federal Circuit Rules Public Key Cryptography Algorithm Invalid Under 35 U.S.C. § 101," July 22, 2020
• "Federal Circuit Invalidates Edison's Light Bulb Patent," October 20, 2019
• "Federal Circuit Invalidates A. G. Bell's Telegraphy Patent," September 2, 2019

Illumina, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)

Federal Circuit Hands Down Modified Opinion in Illumina, Inc. v. Ariosa Diagnostics, Inc.

By Kevin E. Noonan --

Earlier this year, the Federal Circuit (somewhat surprisingly) found claims of two Sequenom patents directed to methods for detecting fetal DNA in maternal blood to satisfy the subject matter eligibility requirements of Section 101 (see "Illumina, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)").  The surprise arose in part due to the Federal Circuit's track record of finding all diagnostic method claims to be ineligible as being directed to a natural law without "something more" to overcome the patentability preclusion created by the Supreme Court in Mayo Collaborative Services v. Prometheus Laboratories, Inc. (see, e.g., Judge Moore's dissent in Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 927 F.3d 1333, 1352 (Fed. Cir. 2019) ( "Since Mayo, we have held every single diagnostic claim in every case before us ineligible.").  Another reason, of course, is that the Federal Circuit affirmed a finding of patent ineligibility in Ariosa Diagnostics, Inc. v. Sequenom, Inc.  Nevertheless, a divided panel found a patent eligibility-creating distinction in the claims asserted in this most recent case (over a dissent by the author of the Ariosa v. Sequenom decision, Judge Reyna) and today the Court issued a revised opinion in the face of Ariosa's petition for rehearing.

To recap, the case arose over U.S. Patent No. 9,580,751 (the '751 patent) and U.S. Patent No. 9,738,931 (the '931 patent), directed to the solution of an unexpected difficulty in detecting cell-free fetal DNA (cffDNA):

[T]he major proportion (generally >90%) of the extracellular DNA in the maternal circulation is derived from the mother.  This vast bulk of maternal circulatory extracellular DNA renders it difficult, if not impossible, to determine fetal genetic alternations [sic] . . . from the small amount of circulatory extracellular fetal DNA.

The inventors found that cffDNA was significantly smaller (300-500 bp) than the "interfering" maternal DNA, and thus using admittedly conventional techniques of size separation the cffDNA could be isolated and rendered detectable.

Illumina and Sequenom asserted claims 1, 2, 4, 5, 9, and 10 of the '751 patent and claims 1, 2, and 10–14 the '931 patent against Ariosa and Roche Diagnostics; the Court considered claim 1 from each patent to be representative:

'751 patent:

1. A method for preparing a deoxyribonucleic acid (DNA) fraction from a pregnant human female useful for analyzing a genetic locus involved in a fetal chromosomal aberration, comprising:
   (a) extracting DNA from a substantially cell-free sample of blood plasma or blood serum of a pregnant human female to obtain extracellular circulatory fetal and maternal DNA fragments;
       (b) producing a fraction of the DNA extracted in (a) by:
           (i) size discrimination of
           (ii) selectively removing the DNA fragments greater than approximately 500 base pairs,
           wherein the DNA fraction after (b) comprises a plurality of genetic loci of the extracellular circulatory fetal and maternal DNA; and
       (c) analyzing a genetic locus in the fraction of DNA produced in (b).

'931 patent:

1. A method, comprising:
   (a) extracting DNA comprising maternal and fetal DNA fragments from a substantially cell-free sample of blood plasma or blood serum of a pregnant human female;
       (b) producing a fraction of the DNA extracted in (a) by:
           (i) size discrimination of extracellular circulatory fetal and maternal DNA fragments, and
           (ii) selectively removing the DNA fragments greater than approximately 300 base pairs,
       wherein the DNA fraction after (b) comprises extracellular circulatory fetal and maternal DNA fragments of approximately 300 base pairs and less and a plurality of genetic loci of the extracellular circulatory fetal and maternal DNA fragments; and
       (c) analyzing DNA fragments in the fraction of DNA produced in (b).

The District Court on summary judgment held these claims and all asserted claims to be ineligible under 35 U.S.C. § 101 and the Supreme Court's Alice/Mayo test (see "Illumina, Inc. v. Ariosa Diagnostics, Inc. (N.D. Cal. 2018)"), and Illumina appealed.

In the original opinion, the Federal Circuit reversed, in an opinion by Judge Lourie joined by Judge Moore; Judge Reyna dissenting (as he does in this revised opinion).  Judge Lourie justified the different outcome here by stating "[t]his is not a diagnostic case.  And it is not a method of treatment case.  It is a method of preparation case."  But the majority based its decision on this distinction:  "[h]ere, it is undisputed that the inventors of the '751 and '931 patents discovered a natural phenomenon.  But at step one of the Alice/Mayo test, 'it is not enough to merely identify a patent-ineligible concept underlying the claim; we must determine whether that patent-ineligible concept is what the claim is 'directed to," citing Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc.  It is undisputed that cell-free fetal DNA (cffDNA) exists in maternal blood and its presence is a natural phenomenon, and moreover that the size differentials and distributions that form the predicate basis for the claims at issue here are also naturally occurring.  But the panel majority held that the claims were not merely "directed to" that natural phenomenon, but rather were directed to a method that exploits the natural phenomenon that renders the claims patent-eligible.  Sounding a theme he first enunciated in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals, Judge Lourie recognizes the distinction that the claims at issue recited "specific process steps—size discriminating and selectively removing DNA fragments that are above a specified size threshold" that increased the relative amount of cffDNA in the processed sample compared to maternal DNA and thus "change[d] the composition of the mixture" and produced a DNA-containing fraction that was different from what naturally occurs in maternal blood.

Judge Lourie's latest opinion reiterates most of these themes.  The basis of the decision remains that "this is not a diagnostic case.  And it is not a method of treatment case.  It is a method of preparation case."  As in the original opinion, the panel majority are somewhat critical of appellants' inability (in the majority's view) to "clearly identify the natural phenomenon that forms the basis of its challenge" but finds that the parties' differences on this point to be relatively meaningless distinctions and adopts Illumina's definition that the natural phenomenon underlying the claimed invention is that "cell-free fetal DNA tends to be shorter than cell-free maternal DNA in a mother's bloodstream."  But the majority arrives at the same conclusion as before:  although the claims are based on this natural phenomenon they "are not directed to that natural phenomenon but rather to a patent-eligible method that utilizes it" (emphasis in opinion).

And the basis of this conclusion relies at least in part on the specific method steps recited by the claims, which might constitute the ineluctable "something more" mandated by the Supreme Court's jurisprudence that looks enough like novelty to disturb any patent practitioner (or more likely scholar) concerned with doctrinal consistency.  But this insistence also cabins the scope of the claims to the specifically recited steps, which goes a long way towards avoiding the overbroad scope that seems to have been at least part of the Supreme Court's concern regarding preemption motivating the Court's attempts to restrict patent eligibility of certain types of claims.  Also important for the panel majority is that the choice of the size distinctions recited in the claims are not themselves natural phenomenon but are "human-engineered parameters that optimize the amount of maternal DNA that is removed from the mixture and the amount of fetal DNA that remains in the mixture in order to create an improved end product that is more useful for genetic testing than the original natural extracted blood sample."  And the result of the claimed methods are a mixture of DNA fragments having a change in their composition, being enriched in fetal-derived DNA fragments shorter than 500 (the '751 patent) or 300 (the '931 patent) basepairs.

The opinion, like its earlier version, distinguishes the claims at issue here with the claims in Supreme Court and Federal Circuit precedent found to be patent-ineligible, most notably that these claims are not directed to isolated DNA itself (Association for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013)), or merely detecting its presence in maternal blood (Ariosa), or even determining "whether a cell-free DNA fragment in a previously-prepared sample is fetal or maternal based on the natural size distribution of cell-free DNA fragments" but rather methods for preparing a mixture enriched in cffDNA based on "conventional separation technologies can be used in unconventional ways," specifically the claimed thresholds of 500 bp and 300 bp for separating fetal from material DNA ("Roche[] has presented no evidence that thresholds of 500 base pairs and 300 base pairs were conventional for separating different types of cell-free DNA fragments.").

An admittedly cursory comparison between the majority opinion issued in March and the one issued today finds precious little difference in the reasoning advanced by the Court.  In contrast, Judge Reyna's dissent appears to refine some of the Judge's arguments but at bottom reiterates his opinion that these claims are directed to a patent-ineligible natural phenomenon.

The Court is properly not transparent regarding the internal discussions and arguments asserted by those Judges who share the majority's views and those who share Judge Reyna's views.  But in light of the great similarities of these opinions it seems apparent that the Court was most comfortable not deciding to hear the case as a result of the revisions occasioned in the opinion handed down today.  Whether there are additional motivations (including putting the panel's disparate views in better condition for Supreme Court review) may become apparent if the Court deigns to revisit what it has wrought in the years since deciding the proper metes and bounds of Section 101 became a priority for the Court.

Illumina, Inc. v. Ariosa Diagnostics, Inc. (Fed. Cir. 2020)
Panel: Circuit Judges Lourie, Moore, and Reyna
Opinion by Circuit Judge Lourie; dissenting opinion by Circuit Judge Reyna

XY, LLC v. Trans Ova Genetics, LC (Fed. Cir. 2020)

By Kevin E. Noonan --

Last week, the Federal Circuit took the opportunity presented in an appeal from judgment on the pleadings in XY, LLC v. Trans Ova Genetics, LC to distinguish claims directed toward a patent-eligible invention from invalidation under the Supreme Court's imperfectly applied Alice Corp. v. CLS Bank Int'l (2014) test.

The case arose over XY's assertion of Reissue Patent No. RE46,559 as well as U.S. Patent Nos. 6,732,422, 7,723,116, and 8,652,769 against Trans Ova.  The claims of the '559 reissue patent were directed to improving flow cytometric analysis.  As set forth in the opinion, the claimed invention related to "apparatus and methods for real-time discrimination of particles while being sorted by flow cytometry . . . resulting in enhanced discrimination between populations of particles" which could include cells, specifically sperm cells based on whether the sperm carried an X or a Y chromosome.  Useful applications included animal husbandry.  The opinion contains this illustration of the functional geometry of apparatuses encompassed by the asserted claims:

and the following explanation:

After passing through a laser beam (34), particles coupled to a light-emitting element may emit signals, such as fluorescence, which are then collected by at least one signal detector, such as a forward scatter detector (30).  . . .  The "signal detector may be connected to a system . . . in which signal data indicative of the signals may be processed and analyzed in order to determine a sort decision."  "While a sort decision []n is being determined, particles may pass through a drop delay (35)." . . .  Following a sort decision, "a pulse of charge (37) may be applied to a droplet (23) containing a particle.  Droplets may pass through charged deflection plates (38) in order to sort particles into a desired sort receptacle (40)" [citations to the specification omitted].

The data produced in this way provides the basis for the apparatus to produce a more discriminating assessment of particles in a mixture, including differences between X- and Y-bearing sperm.  These methods involve signal processors programed to detect differences including "rotational alteration, translation operation, scaling operation, any combination of these and the like."

Claim 1 is representative:

1.  A method of operating a flow cytometry apparatus with at least n detectors to analyze at least two populations of particles in the same sample, the method comprising:
    (a) establishing a fluid stream in the flow cytometry apparatus with at least n detectors, the at least n detectors including a first detector and a second detector;
    (b) entraining particles from the sample in the fluid stream in the flow cytometry apparatus;
    (c) executing instructions read from a computer readable memory with a processor, the processor being in communication with the first detector in the flow cytometer, to detect a first signal from the first detector based on individual particles in the fluid stream;
    (d) executing instructions read from the computer readable memory with the processor, the processor being in communication with the second detector in the flow cytometer, to detect a second signal from the second detector based on the individual particles in the fluid stream;
    (e) executing instructions read from the computer readable memory with the processor to convert at least the first signal and the second signal into n-dimensional parameter data for detected particles in the sample, wherein the n-dimensional parameter data for particles from the at least two populations overlap in at least one of the dimensions;
    (f) executing instructions read from the computer readable memory with the processor to rotationally alter the n-dimensional parameter data so that spatial separation of the data from the particles from the at least two populations in the at least one dimension that is overlapped is increased;
    (g) executing instructions read from the computer readable memory with the processor to real-time classify each of the individual detected particles into one of a first population and a second population of the at least two populations based on at least the rotationally altered n-dimensional parameter data; and
    (h) using the real-time classification, sorting the individual particles with the flow cytometer.

Trans Ova filed a motion for judgment on the pleadings based on the '559 reissue patent being invalid because the claims were not patent-eligible under § 101.  The District Court granted this motion, applying its understanding of the Supreme Court's two step analysis as set forth in Alice Corp. v. CLS Bank Int'l, 573 U.S. 208 (2014).  The Court held that the claims were directed to an abstract idea, specifically a "mathematical equation that permits rotating multi-dimensional data."  Under step two of the Alice test, the District Court held that there was no "inventive concept" to render the claims patent eligible, based on XY's admission that all claim elements were known in the prior art (albeit not in the arrangement or order recited in the asserted claims).  The District Court also granted Trans Ova's motion to dismiss because asserting the '422, '116, and '769 patents was barred by the doctrine of claim preclusion based on an earlier lawsuit.

The Federal Circuit reversed the District Court on its patent eligibility decision, vacated the District Court's judgment on claim preclusion, and remanded, in an opinion by Judge Stoll joined by Judges Plager and Wallach.  With regard to judgment and invalidation for patent ineligibility, the panel held that the District Court had erred in its application of the Alice test.  Specifically, the Federal Circuit held that the asserted claims were not directed to an abstract idea; thus, if properly applied, the Alice test would have mandated that the District Court deny Trans Ova's motion.  The panel considered the Supreme Court's jurisprudence on patent eligibility to include the principle that "[l]aws of nature, natural phenomena, and abstract ideas are not patentable" to be tempered by the further Supreme Court instruction that "[a]t some level, 'all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,'" citing Mayo Collaborative Servs. v. Prometheus Labs, Inc., 566 U.S. 66, 71 (2012), and that further "[t]hus, an invention is not rendered ineligible for patent simply because it involves an abstract concept," citing Diamond v. Diehr, 450 U.S. 175, 187 (1981).  The District Court's error, according to the Federal Circuit, arose in its application of step one of the Alice test, because the asserted claims did not recite an abstract concept in the Court's view.  Even Trans Ova's counsel in argument before the Federal Circuit (according to the opinion) admitted that the claims of the '559 reissue patent were "not merely directed" to the mathematical concept, but rather to "a purportedly improved method of operating a flow cytometry apparatus to classify and sort particles into at least two populations in real time, wherein first and second detectors detect signals from individual particles and a processor converts the signals to n-dimensional parameter data and rotationally alters that data to increase spatial separation among the data, thereby facilitating classification and sorting of each individual particle."  The opinion expressly relied on the Supreme Court's Diehr opinion (as it must), as well as its own opinion in Thales Visionix Inc. v. United States, 850 F.3d 1343 (Fed. Cir. 201), for this conclusion.  The Court found the asserted claims of the '559 reissue patent to be analogous to the claims in Diehr because "the asserted claims 'describe in detail a step-by-step method' for accomplishing a physical process," citing Diehr.  The panel perceived a similar analogy with the Thales claims, which recited methods "in which at least two sensors or detectors gather data about an object before mathematical operations are applied to the gathered data to generate more accurate information about the object than was previously possible in the art."  And both sets of claims "purport to improve results" of previously practiced methods.  The panel appreciated the distinction between a claim directed to a mathematical formula and claims that apply a formula or algorithm to achieve "a function which the patent laws were designed to protect," citing Diehr.

The opinion expressly rejected Trans Ova's contention (and a basis for the District Court's decision) that the asserted claims of the '559 reissue patent were analogous to the claims in Parker v. Flook that were held ineligible because those claims "'simply provide[d] a new and presumably better method for calculating alarm limit values,' requiring nothing more than updating an alarm limit—a number—through application of the recited formula" according to the Flook opinion.  And the panel further understood there to be a distinction between this case and Flook because "[t]he patent application [in Flook] contained no 'disclosure relating to the chemical processes at work, the monitoring of process variables, or the means of setting off an alarm or adjusting an alarm system.'"  Bringing to mind Judge Lourie's emphasis on "specificities" in Vanda Pharmaceuticals Inc. v. Hikma Pharmaceuticals USA Inc., the opinion recites in distinguishing Flook the specifically recited steps in the claimed method.  The opinion cites in support of these distinctions the Supreme Court's holding in Diehr that "a process is not unpatentable simply because it contains a law of nature or a mathematical algorithm."  Finally, the panel distinguished these claims from those in Cleveland Clinic Foundation v. True Health Diagnostics LLC, 859 F.3d 1352 (Fed. Cir. 2017), which were held ineligible on Section 101 grounds, because the Cleveland Clinic claims "used a known laboratory technique to observe a previously unknown natural phenomenon," whereas here the '559 reissue patent claims were directed toward improving a known laboratory technique using the application of the mathematical formula.

With regard to the claim preclusion issue, the panel agreed with XY that the District Court erred by not comparing the claims of the '422, '116, and '769 patents asserted in this action with the asserted claims in the prior lawsuits.  While the District Court recited the proper test ("whether the scope of the patent claims asserted in the 2012 and 2016 lawsuits was 'materially' the same"), the Federal Circuit held that the court did not provide the required comparison.  "Instead," according to the panel opinion, "the district court concluded that claim preclusion applied to XY's '422 and '116 patent-infringement allegations simply because (1) these patents issued before XY filed the 2012 lawsuit; and (2) XY's allegations of infringement 'address the same, or substantially the same subject matter as previously filed claims and [are] directed at a previously accused product or process,'" citing to the District Court's ruling on the motion to dismiss.  The panel considered the District Court to have concluded, without explanation on the record, that this action was "'part of the same transaction that prompted the 2012 [l]awsuit,' because they were 'related in time, origin, and motivation' to, and would have been 'a convenient trial unit' with, the patents asserted in the 2012 lawsuit."  As for the '769 patent, which had not issued when the earlier lawsuits were commenced, the District Court believed litigation over this patent to be "a continuation of a patent already in suit" and thus that XY should have moved the District Court in that earlier litigation to amend its complaint to add the '769 patent.  The Federal Circuit consider its precedent, SimpleAir, Inc. v. Google LLC, 884 F.3d 1160, 1165 (Fed. Cir. 2018), to be "materially indistinguishable" from the circumstance here; in that case, the District Court had held separate lawsuits on two related patents involved the same cause of action solely because the two patents shared the same specification and were both terminally disclaimed over another prior patent.  The Federal Circuit held that later-asserted patent claims "could provide a larger claim scope to a patentee than earlier-asserted patent claims.  According to the Federal Circuit, here "[t]he district court did not even mention the asserted claims of the '422, '116, or '769 patents, let alone analyze their scope as compared to the scope of the patent claims asserted in XY's 2012 lawsuit," which comparison was required under its Simple Air decision.  On this basis, the Federal Circuit vacated and remanded the case to the District Court for a proper analysis of the similarities and differences of the claims asserted in this action and the prior lawsuits.

This case illustrates hopeful and less hopeful trends in the Federal Circuit's jurisprudence on Section 101 subject matter eligibility.  On the one hand the decision illustrates the ease with which a district court can be convinced by an emphasis on the underlying basis for a claimed invention that the claims are directed to the "abstract idea" underlying the invention.  On the other hand, this decision follows a trend of the Federal Circuit distinguishing claims directed to the abstract idea itself and those directed to an application thereof (see, e.g., Rapid Litigation Management Ltd. v. Cellzdirect, Inc.).  But before anyone become giddy at the prospect of the Court finding a reliable guide to subject matter eligibility, it must be considered that on the same day the Court handed down its decision in this case it also denied a petition for rehearing en banc in American Axle & Mfg. v. Neapco Holdings LLC, which will be the subject of a subsequent post.

XY, LLC v. Trans Ova Genetics, LC (Fed. Cir. 2020)
Panel: Circuit Judges Wallach, Plager, and Stoll
Opinion by Circuit Judge Stoll

The Three Properties of Patent-Eligibility: An Empirical Study

By Michael Borella and Ashley Hatzenbihler* --

Patent eligibility is a bit of a mess these days.  Ever since the Supreme Court handed down the Alice v. CLS Bank decision six years ago, the distinction between what might be subject matter that can be patented and what is not has been blurry at best.

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

However, the Court declined to define what it meant by "abstract idea" or "significantly more," leaving that for the Federal Circuit and the rest of us to figure out.  By admission of several of its own members, the Federal Circuit has failed to do so in a cogent fashion.  As just one example (and this is a doozy of an example) Judge Plager wrote in 2018's Interval Licensing v. AOL case that "[t]he law . . . renders it near impossible to know with any certainty whether the invention is or is not patent eligible" and "a search for a definition of 'abstract ideas' in the cases on § 101 from the Supreme Court, as well as from this court, reveals that there is no single, succinct, usable definition anywhere available."

Meanwhile, the USPTO's interpretation of Alice has added more steps to the test, clarified some aspects, muddied others, and counts for little to nothing in the courts.

Simply put, the problem is that we are spending too much time trying to ascertain the unknowable contours of Alice.  The Federal Circuit has separated and combined and separated and combined the two parts to the point where some have questioned whether Alice is actually a one-part inquiry in practice.  Further, at the prompting of ill-reasoned language from Justice Breyer in Mayo v. Prometheus, the Federal Circuit has amplified that case's overlap between §§ 101, 102, 103, and 112.

Rather than approach the Alice test with the rigidity of an automaton, there is a more pragmatic approach.  As described in a previous article, what the Federal Circuit is actually looking for to rule that a claim is patent-eligible can be expressed as three properties:  specificity, technical character, and novelty.  And not only does a claim almost certainly have to exhibit each to clear the § 101 hurdle, but there needs to be a nexus between these properties.  In other words, if one element of a claim is specific, another has technical character, and yet another is novel, that probably will not cut it.  Instead, a single element should exhibit all three.

That is not to say that claims lacking one of these properties are automatically ineligible -- there is a certain degree of flexibility in how the Federal Circuit balances the three.  But, as a rule, the more specific, technical, and novel your claim, the more likely it is to be patent-eligible.  Conversely, the less specific, technical, and novel your claim, the less likely it is to be patent-eligible.  A synthesis of the Federal Circuit § 101 case law makes this clear, and we have the data to back it up.

But before we get into the empirical stuff, let's do something that the Supreme Court did not do and define our terminology.

Claim specificity is not the same thing as claim breadth, although in practice the two are correlated.  Specificity, though, refers to whether and how much the claim recites a series of steps or set of elements that can be used to achieve a goal, rather than the goal itself.  The latter style has been referred to as "result-oriented," "outcome-oriented," and "black box" claiming, where the claim recites what the inventor hopes to achieve without reciting how the inventor purports to have achieved that goal.  The Federal Circuit often lauds the specificity of claims that it eventually find eligible (see McRO, Inc. v. Bandai Namco Games America Inc., Enfish LLC v. Microsoft Corp., Trading Techs Int'l v. CQG, Inc., and SRI Int'l Inc. v. Cisco Systems Inc.) while disparaging claims that lack this property (see Electric Power Group, LLC v. Alstom S.A., Two-Way Media Ltd. v. Comcast Cable Communications, LLC, and American Axle & Mfg. v. Neapco Holdings LLC).

Technical character is a bit trickier to explain.  Notably, § 101 lacks any requirement that inventions be technical, and even Alice only hinted that such a requirement might be the case.  But the Federal Circuit has run with these sub-dicta suggestions, using the term "technical solution to a technical problem" among others to describe what it is looking for in eligible claims.  To understand this property, it helps to imagine all inventions on a spectrum of technical character.  Those at one extreme are clearly technical because they improve the operation of machines (engine control, error correction coding, image sharpening, memory management in a computer).  Those at the other extreme are clearly more business-oriented than technical (derivative trading, annuity calculations, human resource management, retail schemes).  Put another way, the former improves how a machine works, while the latter improves how a business works.  The fact that business-oriented inventions can be run on computers (and may even require computers to obtain meaningful results) is largely irrelevant to this analysis -- such claims are still "non-technical".  Finally, in the middle of the spectrum we have inventions that improve how a person works (graphical user interfaces, video game animations, livestock management).  These could be viewed as either technical or non-technical depending on the actual claim language at play.

Novelty is a simple enough concept, and is well-understood in patent law.  The exact nature of the de facto prior art analysis under § 101 is unclear.  Nonetheless, comparisons between claimed inventions and prior art are found in a vast number of § 101 decisions including the aforementioned KPN, Chamberlain, Enfish, and McRO cases, as well as Cellspin Soft, Inc. v. Fitbit, Inc., Data Engine Technologies LLC v. Google LLC, Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., and Internet Patents Corp. v. Active Network, Inc., just to name a few.

So are the three properties a better way of understanding patent-eligibility than the two-part test?  We think so.  Do we like it?  No.  Do we think it is what the law should be?  Of course not.  But don't just take it from us.  Anyone who balks at the three properties should take note of Dropbox Inc. v. Synchronoss Techs. Inc. where the Federal Circuit recently wrote "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art" (emphasis added).

To quantify the three properties, we selected 24 notable post-Alice Federal Circuit decisions and scored them on a scale of 0-2 for each property, where 0 is a low score and 2 is a high score.  This scoring was not done in a vacuum -- we adhered to the following process.  If the Court spoke positively of a particular property in a decision, the score for that property would be a 2.  If the Court spoke negatively of a particular property, the score for that property would be a 0.  If the Court spoke neither positively nor negatively about a property or did not discuss the property in sufficient detail, we would review the claim language and the Court's discussion of the invention to come up with a value.

Thus, a specificity of 2 indicates that the claim describes the elements or steps involved in achieving its goal.  A specificity of 0 indicates that the claim is outcome-oriented.  A specificity of 1 indicates that the claim is partially descriptive and partially outcome-oriented.

Likewise, a technical character of 2 indicates that the claim is focused on a technical solution to a technical problem (i.e., improving the operation of a machine or system).  A technical character of 0 indicates that the claim is focused on a non-technical problem (i.e., improving the operation of a business).  A technical character of 1 indicates that the claim exhibits both technical and non-technical aspects (i.e., improving human performance or facilitating human decision making).

Similarly, a novelty of 2 indicates that the Court has stated that the claim is focused on an advance over the prior art.  A novelty of 0 indicates that the Court has stated that the claim is focused on a long-standing procedure or uses well-understood, routine, or conventional elements or steps to achieve its goal.  A novelty of 1 indicates that the Court made little or no comparison between the claim and the prior art.

Once determined, the specificity, technical character, and novelty scores for each case were added, resulting in summed values from 0 to 6.  Intuitively, one would expect that the higher this sum, the more likely that a claim is to be held eligible.

So, on to the data.

Case	Specificity (0-2)	Technical Character (0-2)	Novelty (0-2)	Sum (0-6)	Eligible?
DDR Holdings, LLC v. Hotels.com, L.P. (Fed. Cir. 2014)	2	1	1	4	Yes
Internet Patents Corp. v. Active Network, Inc. (Fed. Cir. 2015)	0	1	1	2	No
Versata Dev. Group, Inc. v. SAP America, Inc. (Fed. Cir. 2015)	2	0	0	2	No
Electric Power Group, LLC. V. Alstom S.A. (Fed. Cir. 2016)	0	0	1	1	No
Enfish LLC v. Microsoft Corp. (Fed. Cir. 2016)	2	2	2	6	Yes
McRo, Inc. v. Bandai Mamco Games America, Inc. (Fed. Cir. 2016)	2	2	2	6	Yes
Shortridge v. Found. Construction Payroll Service, LLC (Fed. Cir. 2016)	2	0	0	2	No
Thales Visionix Inc. v. U.S. (Fed. Cir. 2017)	0	2	2	4	Yes
The Chamberlain Group, Inc. v. Techtronic Indus., Co. (Fed. Cir. 2017)	0	1	1	2	No
Trading Techs Int'l v. CQG, Inc. (Fed. Cir. 2017)	2	1	2	5	Yes
Two-Way Media Ltd. v. Comcast Cable Commc'n., LLC (Fed. Cir. 2017)	0	1	1	2	No
Berkheimer v. HP Inc. (Fed. Cir. 2018)	1	2	2	5	Yes
Core Wireless Licensing S.A.R.L. v. LC Elec., Inc. (Fed. Cir. 2018)	2	2	2	6	Yes
Data Engine Tech. LLC v. Google LLC (Fed. Cir. 2018)	2	2	2	6	Yes
SAP America, Inc. v. InvestPic LLC (Fed. Cir. 2018)	0	0	2	2	No
Cellspin Soft, Inc. v. Fitbit, Inc. (Fed. Cir. 2019)	2	1	1	4	Yes
ChargePoint, Inc. v. SemaConnect, Inc. (Fed. Cir. 2019)	0	1	1	2	No
Koninklijke KPN N.V. v. Gemalto M2M GmbH (Fed. Cir. 2019)	2	2	2	6	Yes
SRI Int'l Inc. v. Cisco Sys. Inc. (Fed. Cir. 2019)	1	2	2	5	Yes
Trading Techs Int'l v. IBG LLC (Fed. Cir. 2019)	2	0	1	3	No
Elec. Commc'n. Techs., LLC v. ShoppersChoice.com, LLC (Fed. Cir. 2020)	0	0	0	0	No
Ericsson Inc. v. TCL Commc'n. Tech. Holdings Ltd. (Fed. Cir. 2020)	0	1	1	2	No
Dropbox, Inc. v. Synchronoss Techs. Inc. (Fed. Cir. 2020)	0	1	0	1	No
Uniloc USA, Inc. v. LG Elecs. USA, Inc. (Fed. Cir. 2020)	1	2	2	5	Yes

The 24 scored cases include 12 that were ruled eligible and 12 that were ruled ineligible.  Of the eligible cases, the sums of all landed in the range of 4-6.  Of the ineligible cases, the sums of all landed in the range of 0-3.  Thus, our initial intuition appears to be correct -- eligible claims tend to be more specific, technical, and novel, while ineligible claims are less specific, technical, and novel.  Notably, there were five with the highest possible sum of 6, but only one with the lowest possible sum of 0.

Overall, there was a correlation of 0.91 between sum and whether the claim was patent-eligible (we converted the "yes" or "no" results of the rightmost column to 1's and 0's respectively to perform correlations).  While this is a very high correlation, we need to keep in mind that in most cases correlation does not mean causation.  However, we believe that our analysis reflects a causative link from the properties of specificity, technical character, and novelty to eligibility.  In particular, the Court often states explicitly that a claim is eligible because it exhibits each of the three properties to at least some degree, or that a claim is ineligible because it lacks at least one of these properties.

We also calculated correlations between each of the properties and the eligibility outcome.  For specificity, the correlation was 0.58, for technical nature, the correlation was 0.80, and for novelty, the correlation was 0.74.  These results have an interesting implication for patent practitioners drafting initial claim sets or making amendments.  The technical nature of an invention appears to have the biggest impact on whether it is found to be eligible, but the practitioner has the least control over this aspect.  An invention that solves a business problem may be difficult to recast as solving a technical problem even using the cleverest claim drafting techniques.  Specificity and novelty, however, are more under the control of the practitioner, as detailed elements directed toward features believed not to be in the prior art can always be added (modulo the applicant's needs of course).  Thus, for a claim that is on the fence with respect to its technical character, making sure that it has at least one element that is specific and novel may help.

To sum up, the three properties appear not only to be a reasonably useful way of thinking about patent-eligibility in a world where the two-part test is bewildering and obtuse, it is also highly predictive of patent-eligibility outcomes.[1]  Nonetheless, while we attempted to avoid any bias during the scoring process, we are aware that there is a degree of subjectivity in our evaluations.  Moreover, the set of case law should be expanded beyond these 24 samples.  Therefore, we welcome others to suggest adjustments to the scoring and/or to continue this study with further cases.

[1] Of course, when you are before the USPTO or a Court, you need to argue the two parts of Alice.  But keeping the three properties in mind can help you hone those arguments.

* Ashley Hatzenbihler is a student at Loyola University Chicago School of Law where she is focusing her studies on Intellectual Property.  Ashley is a staff member of the Loyola University Chicago Law Review and a Summer Associate at McDonnell Boehnen Hulbert & Berghoff.  Prior to law school, Ashley received her Bachelors in Mechanical Engineering with a minor in Mathematics from Marquette University.  Ashley also completed her Masters of Science in Mechanical Engineering for her research on the optimal conditions for auto-ignition testing of diesel fuels and surrogates from Marquette University.

Federal Circuit Rules Public Key Cryptography Algorithm Invalid Under 35 U.S.C. § 101

Note:  The below is a sarcastic parody, in the spirit of our earlier sarcastic parodies.

By Michael Borella --

WASHINGTON D.C., June 23, 1984.  In a unanimous decision, the Federal Circuit has ruled U.S. Patent No. 4,405,829 invalid under 35 U.S.C. § 101, finding the claimed invention directed to an abstract idea.  The '829 patent, assigned to the Massachusetts Institute of Technology (MIT), was the brainchild of three of its professors, Ronald Rivest, Adi Shamir, and Leonard Adleman.  Lauded in academic circles as one of the first viable public-key cryptosystems and duly granted by the U.S. Patent and Trademark Office, the Court nonetheless found that the patent lacked an inventive concept necessary for patentability.

Soon after issuance, MIT sought to license the patent to various companies developing security software and hardware.  Speaking under condition of anonymity, in-house counsel at one of these companies said, "We knew that there was no way the courts would uphold this patent, so there was no reason to take it seriously."  A number of these potential licensees joined a declaratory judgment action, asking the U.S. District Court for the District of Massachusetts to find the claims of the patent ineligible.  The District Court did so, and MIT appealed to the Federal Circuit.

Claim 1, which was agreed to be representative, recites:

The Court began its analysis "by first determining whether the claims at issue are directed to a patent-ineligible concept, such as law of nature, natural phenomena, or abstract idea."  This did not take long, as it noted that, "[t]he focus of the claims, as is plain from their terms, is on encoding a message into ciphertext using mathematical techniques and decoding the message from the ciphertext using complementary mathematical techniques -- that is all abstract."

MIT countered, arguing that the claimed invention was "revolutionary in nature."  It asserted that, prior to the '829 patent, encryption was largely based on symmetric keys.  Such systems involved using a key to encrypt a message to ciphertext, and the same key again to decrypt the ciphertext back into the message.  The disadvantage of such a system is that the symmetric key had to first be shared or distributed across an insecure medium in order to be effective.  The claimed invention, according to MIT, overcame this technical barrier by generating two mathematically inverse keys -- a public key (e), and a private key (based on d, p, and q).  The security of the system relied on the intractability of factoring large prime numbers (p and q).  Further, MIT contended that the claimed cryptosystem would facilitate "many future innovations, such as electronic commerce, virtual private networks, security of stored data, and military communications."

The Court was not convinced, stating that "even if the techniques claimed are groundbreaking, innovative, or brilliant, that is not enough for eligibility -- a claim for a new abstract idea is still an abstract idea."  Notably, the Court found that "the subject matter is nothing but a series of mathematical calculations based on selected information."  Moreover, the Court was skeptical about the potential of the claimed cryptosystem, relying on statements made by the challengers' expert indicating that "it would be dozens of years before computers were powerful enough to carry out the claimed exponentiations a reasonable time frame."

Finding the claim directed to an abstract idea, the Court moved on to determining whether the remaining elements of the claim constitute an inventive concept.  Such a concept needs to be "sufficient to transform the claimed abstract idea into a patent eligible application."  Here, the Court found that all additional elements, such as the encoding means, decoding means, and communications channel, "merely invoke well-understood, routine, conventional components and activity to apply the abstract idea identified previously."  Indeed, the Court noted that the encoding means and decoding means were "functionality claimed at a high level of generality, thus failing to limit the claim to a particular embodiment of this abstract idea."  Particularly, "nothing in the claims, understood in light of the specification, requires anything other than an off-the-shelf, conventional computer, or components thereof."

MIT attempted to establish that its technique was unconventional, but the Court rapidly shot down that notion.  It held that "the mathematical principles that MIT refers to may indeed be innovative, but they are also abstract," and "one cannot argue that a concept held abstract under part one of the analysis is inventive under part two."  Additionally, the Court observed that "the allegedly unconventional technique did no more than apply longstanding, well-understood mathematical operations -- multiplication, exponentiation, and modulus, for example."

Thus, the claims lack an inventive concept and fail the § 101 test.  The Court summed up by stating, "[a]n inventor who makes an advance such as this one cannot obtain patent protection for the advance itself and must seek protection outside of patent law, such as in the law of trade secrets."

Packet Intelligence LLC v. NetScout Systems, Inc. (Fed. Cir. 2020)

By Michael Borella --

Introduction

Packet Intelligence sued NetScout in the Eastern District of Texas, alleging infringement of U.S. Patent Nos. 6,665,725, 6,839,751, and 6,954,789.  The District Court ruled that all three patents were valid under 35 U.S.C. §§ 101 and 102, and infringed.  The § 101 dispute was tried at the bench.  NetScout appealed.

The core technological aspects under dispute are described reasonably well in the '789 patent as follows:

Some prior art packet monitors classify packets into connection flows.  The term "connection flow" is commonly used to describe all the packets involved with a single connection.  A conversational flow, on the other hand, is the sequence of packets that are exchanged in any direction as a result of an activity—for instance, the running of an application on a server as requested by a client.  It is desirable to be able to identify and classify conversational flows rather than only connection flows.  The reason for this is that some conversational flows involve more than one connection, and some even involve more than one exchange of packets between a client and server.

A hypothetical example of this might be that a packet monitor examining packets only on the granularity of TCP connection flows (defined by a 5-tuple of source and destination IP address, source and destination port, and protocol) might not be able to identify two TCP connection flows involving in the same transaction as being related to one another as members of a conversational flow.  Notably, the '789 patent has a June 1999 priority date, a time frame in which this type of packet monitor typically was only able to identify flows based on static filters.  Today's packet monitors largely have the ability to dynamically identify multiple related flows.

Claim 19 of the '789 patent was agreed upon to be representative, and recites:

19.  A packet monitor for examining packets passing through a connection point on a computer network, each packet conforming to one or more protocols, the monitor comprising:
    (a) a packet acquisition device coupled to the connection point and configured to receive packets passing through the connection point;
    (b) an input buffer memory coupled to and configured to accept a packet from the packet acquisition device;
    (c) a parser subsystem coupled to the input buffer memory and including a slicer, the parsing subsystem configured to extract selected portions of the accepted packet and to output a parser record containing the selected portions;
    (d) a memory for storing a database comprising none or more flow-entries for previously encountered conversational flows, each flow-entry identified by identifying information stored in the flow-entry;
    (e) a lookup engine coupled to the output of the parser subsystem and to the flow-entry memory and configured to lookup whether the particular packet whose parser record is output by the parser subsystem has a matching flow-entry, the looking up using at least some of the selected packet portions and determining if the packet is of an existing flow; and
    (f) a flow insertion engine coupled to the flow-entry memory and to the lookup engine and configured to create a flow-entry in the flow-entry database, the flow-entry including identifying information for future packets to be identified with the new flow-entry, the lookup engine configured such that if the packet is of an existing flow, the monitor classifies the packet as belonging to the found existing flow; and if the packet is of a new flow, the flow insertion engine stores a new flow-entry for the new flow in the flow-entry database, including identifying information for future packets to be identified with the new flow-entry,
    wherein the operation of the parser subsystem de-pends on one or more of the protocols to which the packet conforms.

We will discuss the Court's § 101 analysis of this claim.

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

Notably, procedure for the proper application of this test with the abstract idea exception has been inconsistently defined and is confusing in practice.  A potentially more workable definition of patent eligibility is that a claim is directed to an abstract idea if all of its elements are either non-specific, address a non-technical problem, or known in the art.  Thus, a claim is more likely to survive a § 101 challenge if one or more elements thereof have three qualities:  specificity, a technical problem that they solve, and some degree of novelty.

The Majority Opinion

Judge Lourie wrote for the majority, which was he and Judge Hughes.  The majority provided an overview of the District Court's § 101 analysis, of note being that the District Court made a series of factual findings with respect to the claimed invention versus the prior art and based its holding of eligibility on those findings.

In any event, the majority framed its opinion by stating that "[i]n our eligibility analysis, we consider the claim as a whole and read it in light of the specification."  The majority cited to a number of previous Federal Circuit decisions relating to the patent-eligibility of computer-implemented and networking inventions.  In this, the majority emphasized that the inquiry often turns on "whether the focus of the claims is on a specific asserted improvement in computer capabilities or, instead, on a process that qualifies as an 'abstract idea' for which computers are invoked merely as a tool."

With the § 101 framework in place, the majority agreed with the District Court that claim 19 was not directed to an abstract idea.  Particularly, "claim 19 purports to meet a challenge unique to computer networks, identifying disjointed connection flows in a network environment" and provides "detail how this is achieved in several steps."

Moreover, "[t]he asserted patents' specifications make clear that the claimed invention presented a technological solution to a technological problem."  They "explain that known network monitors were unable to identify disjointed connection flows to each other, and the focus of the claims is a specific improvement in computer technology: a more granular, nuanced, and useful classification of network traffic."

NetScout argued that Two-Way Media Ltd. v. Comcast Cable Commc'ns, LLC mandates limiting the Alice part one analysis to the specification's concrete embodiments.  But the majority observed that Two-Way Media stands for the notion that the claims, "not the specification, must include an inventive concept" under Alice part two.  Since the majority concluded that claim 19 was not abstract under part one, it did not have to reach part two.

Accordingly, the claimed invention was found to be patent-eligible.

Judge Reyna's Dissent

Judge Reyna wrote in dissent because, in his view, "the claims are directed to the abstract idea of identifying data packets as belonging to conversational flows rather than discrete connection flows."  Judge Reyna stressed that "the asserted advance over the prior art is the classification of data packets according to the flow of data associated with given activities rather than potentially disjointed exchanges transmitted over individual connections."  And, he found this distinction to be "conceptual, not technological, in the absence of specific means by which that classification is achieved."

The crux of the disagreement between Judge Reyna and the majority is that Judge Reyna limited his § 101 inquiry to the language of the claim, while the majority looked to the specification.  Judge Reyna noted that claim 19 recites "only a general method of sorting data packets according to any flow, not a specific means of sorting packets by conversational flow," and that "the claim does not recite how the individual packets are actually identified as belonging to a conversational flow beyond the functional requirement that identifying information is used."

Judge Reyna admitted that the specification provides the necessary detail, but "[n]one of these processes or components are recited in claim 19, and the claim elements have not been construed as limited to the structures and processes disclosed in the embodiments."  Thus, "the components and operations actually recited in the claims do not provide the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it."  Without this detail, Judge Reyna believes that the invention is drawn to information processing "falling within the realm of abstract ideas."

Conclusion

The majority found claim 19 to be a reasonably specific technical invention that provided an advance over the prior art.  Judge Reyna disputed this finding because he views the claim as being non-specific in terms of its technical character, thereby making any such improvement to be too abstract for patenting.  The case turned on a disagreement in fundamental principle -- when and how should one read the technical aspects of a specification into the broader language of the claims, if at all?  Until this question is answered, the appropriate level of detail to place into claims will remain an open issue.

Packet Intelligence LLC v. NetScout Systems, Inc. (Fed. Cir. 2020)
Panel: Circuit Judges Lourie, Reyna, and Hughes
Opinion by Circuit Judge Lourie; opinion concurring in part and dissenting in part by Circuit Judge Reyna

Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC (Fed. Cir. 2020)

By Michael Borella --

Electronic Communication Technologies (ECT) sued ShoppersChoice in the Southern District of Florida for allegedly infringing claim 11 of U.S. Patent No. 9,373,261.  The claim recites:

11.  An automated notification system, comprising:
    one or more transceivers designed to communicate data;
    one or more memories;
    one or more processors; and
    computer program code stored in the one or more memories and executed by the one or more processors, the computer program code comprising:
        code that enables a first party associated with a personal communication device (PCD) to input or select authentication information for use in connection with a subsequent notification communication session involving advance notice of a delivery or pickup of a good or service at a stop location by a mobile thing (MT);
        code that causes storage of the authentication information;
        code that monitors location or travel information in connection with the MT;
        code that causes initiation of the notification communication session to the PCD with the one or more transceivers, in advance of arrival of the MT at the stop location, based at least in part upon the location or travel information associated with the MT;
        code that, during the notification communication session, provides the authentication information to the PCD that indicates to the first party that the notification communication session was initiated by an authorized source; and
        code that, during the notification communication session, enables the first party to select whether or not to engage in a communication session with a second party having access to particulars of the pickup or delivery.

ShoppersChoice moved that the claim was invalid under 35 U.S.C. § 101, and the District Court granted this judgment on the pleadings.  ECT appealed.

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

Notably, procedure for the proper application of this test with the abstract idea exception has been inconsistently defined and is confusing in practice.  A potentially more workable definition of patent eligibility is that a claim is directed to an abstract idea if all of its elements are either non-specific, address a non-technical problem, or known in the art.  Thus, a claim is more likely to survive a § 101 challenge if it has three qualities:  specificity, a technical problem that it solves, and some degree of novelty.

Applying part one of Alice, the Court rapidly determined that the claim is directed to the abstract idea of "providing advance notification of the pickup or delivery of a mobile thing."  Particularly, the Court agreed with the District Court judge that "business practices designed to advise customers of the status of delivery of their goods have existed at least for several decades, if not longer."  And as we know from Alice, claims to longstanding business practices are given a dim view under § 101.

ECT argued that the claimed invention incorporated security enhancements, such as authentication of the notification communication session.  But the Court found these features to be claimed, and described in the specification, at so high a level that they could be virtually anything.  Therefore, they did not render the claim any less abstract.  Furthermore, "the process of recording authentication information . . . and including that information in a subsequent communication with the customer is abstract not only because it is a longstanding commercial practice, but also because it amounts to nothing more than gathering, storing, and transmitting information."

ECT also argued that its procedural openness and success at the USPTO should be factored into the § 101 inquiry.  ECT noted that the application "sailed through" the USPTO with "complete and total transparency."  Moreover, ECT requested that the USPTO reconfirm its findings of patentability under § 101 after receiving a notice of allowance, which the USPTO did.  Nonetheless, it should be surprising to absolutely nobody that the Federal Circuit does not put much weight on what the USPTO thinks about § 101 in any given matter.  The Court wrote:

These specific details relating to the procedure of prosecution before the USPTO bear no relationship to the subject matter to which claim 11 is directed and do not negate the fact that claim 11 is directed to longstanding business practices.  Nor do ECT's purported diligence and good faith during patent prosecution before the USPTO in any way shield the patent's claims from Article III review for patent eligibility.

Accordingly, the Court found the claim abstract and moved on to step two of Alice.  Here, it found that claim 11 did not pass muster "[b]ecause [it] is specified at a high level of generality, is specified in functional terms, and merely invokes well-understood, routine, conventional components and activity to apply the abstract idea identified previously."

ECT made an interesting argument, stating that in another § 101 case, the Court "held a far shorter, far less enabled claim valid."  The Court shot down this comparison, stating that "patent eligibility turns on the content of the claims, not merely on the number of words recited in the claims."  The Court went on to observe that "just because a patent claim is enabled does not mean that the claim is patent eligible—subject matter eligibility and enablement are separate inquiries, irrespective of any overlap between the two."

So the Court seems to be affirming that there is -- or at least can be -- some commonality between the § 101 and § 112(a) inquiries.  But this commonality is not fleshed out any further.  For that matter, the Court's earlier statements also imply overlap between the analyses of § 101 and § 112(f), but again we are left to guess as to the extent and implications of any such overlap.

Finally, ECT argued that the District Court should have construed the claims before rendering a § 101 decision.  But ECT did not identify any terms needing construction, so the Court dismissed this notion and held that claim 11 does not meet the requirements of § 101.

Electronic Communication Technologies, LLC v. ShoppersChoice.com, LLC (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges Dyk and Wallach
Opinion by Circuit Judge Wallach

In re Zunshine (Fed. Cir. 2020)

By Donald Zuhn –-

Earlier today, the Federal Circuit affirmed the rejection by the Patent Trial and Appeal Board of claims 1-3 of U.S. Patent Application No. 15/726,162 as being patent ineligible under 35 U.S.C. § 101.  The '162 application, which is entitled "An Iterative Process of Squeezing Excess Food out of Daily Food Intake to Achieve and Maintain Weight Loss Using Hunger as a Feedback Mechanism," is directed to a method for weight loss.  The '162 application contains three independent claims, of which claim 1 is representative:

1.  A process wherein, on day one, you--which stands for a user of the process-- cut your food intake during all three regular meals, break-fast, lunch, and dinner, by 1/3 and keep it that way for 3 months, and follow the how-to-eat rules: (1) no food unless you are hungry, or it is your regular mealtime, breakfast, lunch, or dinner, (2) if you are hungry and it is not your regular mealtime, you drink a glass of water, first, and wait 10-15 minutes; if you are still hungry, then you eat a snack, and (3) the amount of the snack is determined by your BMI (body mass index) and the time left before the next regular meal or bedtime, whichever comes first.

During prosecution of the application, the Examiner rejected claims 1-3 of the '162 application as being patent ineligible under § 101.  The Applicant, Mr. Zach Zunshine, appealed the rejection to the Board, which affirmed the Examiner's rejection.  In particular, the Board agreed with the Examiner that the claims recite an abstract idea, concluding that the claims describe methods of managing personal behavior, and that the claims do not recite any limitations that integrate the abstract idea into a practical application.

In affirming the Board, the Federal Circuit similarly concluded that claims 1–3 are directed to an abstract idea.  The Court explained that "[e]ach of claims 1–3 amount to nothing more than reducing food intake to achieve weight loss and snacking to curb hunger," adding that "[h]umans have long managed their personal diets in such a manner, and thus claims 1–3 are directed to an abstract idea."  Citing Trading Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1084, 1092 (Fed. Cir. 2019), the Court also noted that "[t]he fact that the claims might add a 'degree of particularity' as to the amount that food intake is reduced 'does not impact our analysis at step one.'"

In response to the Applicant's argument that claims 1–3 are not directed to abstract ideas because these claims "represent specific improvements in the field of calorie-restrictive diets," analogizing the '162 application to McRO, Inc. v. Bandai Namco Games America, 837 F.3d 1299 (Fed. Cir. 2016), and Rapid Litigation Management, Ltd. v. CellzDirect, Inc., 827 F.3d 1042 (Fed. Cir. 2016), the Court responded that:

[U]nlike the specific improvements recited by the claims in those cases, the purported improvement in claims 1–3—i.e., solving the "hunger problem" in calorie-restricted weight-loss diets—is neither a technical improvement tied to a specific apparatus nor an improvement of an existing technological process.  Instead, in this case, the solution to the hunger problem in claims 1–3 is itself an ineligible abstract idea.

In response to the Applicant's argument that claims 1-3 teach the treatment of a disease (i.e., obesity and diseases afflicting the overweight and obese) and are patent eligible like the claims in Vanda Pharmaceuticals Inc. v. West Ward Pharmaceuticals International, Ltd., 887 F.3d 1117 (Fed. Cir. 2018), the Court disagreed, noting that:

In Vanda, we did not hold that all methods of treating a disease are categorically patent eligible, but explained that the claims at issue were patent eligible because they were directed to "a specific method of treatment for specific patients using a specific compound at specific dose to achieve a specific outcome."  887 F.3d at 1136 (emphases added).  Claims 1–3 are quite different.  The claims merely direct a user to manage his or her food intake according to a series of rules that humans have long followed in managing their diets.  Such personal management of food intake is an abstract idea that is not patent eligible.

The Court determined that the claims of the '162 application were different from those found to be patent eligible in Vanda, pointing out that the claims at issue here "merely direct a user to manage his or her food intake according to a series of rules that humans have long followed in managing their diets," and concluding that "[s]uch personal management of food intake is an abstract idea that is not patent eligible."

Turning to the second step of the Alice/Mayo inquiry, the Court determined that nothing in the claims, either individually or as an ordered combination, transformed the claims into a patent-eligible application of the abstract idea recited therein.  In response to the Applicant's argument that the elements of claims 1–3 are not found in the prior art and together the elements produce "spectacular" weight loss, the Court responded that "[t]he purported inventive concepts . . . are nothing more than the abstract ideas themselves," and that the suggested novelty of the claims fails to transform the abstract idea of limiting food intake into a patent-eligible process.  The Court therefore affirmed the Board's determination that claims 1-3 of the '162 application are patent ineligible under § 101.

In re Zunshine (Fed. Cir. 2020)
Nonprecedential disposition
Panel: Chief Judge Prost and Circuit Judges Newman and O'Malley
Per curiam opinion

Barbaro Technologies, LLC v. Niantic, Inc. (N.D. Cal. 2020)

Claims for an Interactive 3D Virtual Environment Found Patent Ineligible

By James Korenchan --

In the field of computer gaming, the U.S. District Court for the Northern District of California recently granted Defendants' Rule 12 motion alleging that claims 1, 3, and 6 of U.S. Patent No. 8,228,325 (the '325 Patent) are invalid as claiming patent-ineligible subject matter under 35 U.S.C. § 101.  Plaintiff Barbaro Technologies, LLC (hereinafter "Barbaro") had contended that the video games Ingress and Pokémon Go, developed and published by Defendant Niantic, Inc. (hereinafter "Niantic"), infringed these claims.  The suit also involves U.S. Patent No. 7,373,377, of which the '325 Patent is a divisional.  However, Niantic's motion only addressed the claims of the '325 Patent.

The '325 Patent claims a computer system for providing a "three-dimensional virtual thematic environment" (abbreviated in the opinion and hereinafter as "3D VTE").  The background of the '325 Patent notes that "virtual environments, especially those present on the internet, for example, have not provided the user with a real world experience."  The '325 Patent thus aims to integrate audio, video, 2D/3D technology, and other applications or services (e.g., "mini-applications," as the '325 Patent calls them, such as word processing programs or email programs) in order to provide a virtual and real world experience to users.  More particularly, the '325 Patent describes that the 3D VTE can be a gaming environment, geographic environment, or other theme of environment in which and with which a software application can simulate real-world interaction.  For example, a user can select a city to visit and the software will integrate real-world data (e.g., satellite and street view images, 2D/3D graphics) into a 3D VTE resembling the city that the user can navigate and interact with, such as in a third or first person view.  For instance, a user might travel down a street in the simulated city and "enter" a bookstore by clicking a mouse on the virtual representation of the bookstore.  The '325 Patent lists numerous examples of real-time and real-world data that can be integrated into 3D VTEs, such as sports scores, film, news, and a "real-world geographic location of a user."

The claims at issue in this case are reproduced below:

1.  A computer system for providing a virtual thematic environment, comprising:
    at least one memory having at least one program comprising the steps of:

retrieving information for utilization with a three-dimensional virtual thematic environment, from external sources over the internet, said information including a real-world geographic location of a user within said three-dimensional virtual thematic environment; and

integrating said information into the three-dimensional virtual thematic environment, such that the three-dimensional virtual thematic environment includes said real-world geographic location displayed to the user as said three-dimensional virtual thematic environment;

    wherein the user interacts with the three-dimensional virtual thematic environment as a simulated real-world interaction, depending on the user's geographical three-dimensional movement through the three-dimensional virtual thematic environment; and
    at least one processor for running the program.

3.  The system according to claim 1, wherein said information includes real-time information.

6.  The system according to claim 1, further comprising: displaying said information to a user in a mini-application within the virtual thematic environment.

In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test for determining whether a claim is directed to patent-eligible subject matter under § 101.  First, it must be determined whether the claim involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, it must be determined whether the claim recites an inventive concept -- that is, an element or combination of elements that is sufficient to ensure that the claim is significantly more than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as significantly more, nor does an element or combination of elements that is well-understood, routine, and conventional.

In applying the first part of the Alice test, the District Court deemed claim 1 to be directed to an abstract idea of removing the disconnect between the user in the real-world and a VTE.  As noted above, and as argued by Barbaro, the prior art virtual environments allegedly did not provide users with real-world experiences, and thus the '325 Patent improves over these environments by providing a way to integrate AV, 2D/3D technology, etc. to maximize a real-world experience for users, thereby effectively removing the disconnect between the real-world user and the 3D VTE.  Barbaro also argued that its claims are analogous to those in Federal Circuit cases such as Enfish, LLC v. Microsoft Corp.

The Court was not convinced, instead asserting that the claimed computer system, memory, and processor are "standard" components, and that "[t]he claims demonstrate the improvement offered by the '325 Patent is directed at a result—integrating the real and virtual worlds—rather than at any particular method of achieving it."  The Court noted that the claimed computer system, memory, and processor are "standard" components, and that the claimed steps can be performed using any combination of existing technologies.  Neither the claims nor the patent specification, in the Court's view, elaborated on how to integrate real-world information into the 3D VTE.  In particular, the Court said:

[T]he claims of the '325 Patent are not directed to the means or method of the claimed invention. They are focused on the result: allowing the user to "interact[] with the [3D VTE] as a simulated real-world interaction, depending on the user's geographical three dimensional movement through the [3D VTE]."  '325 Patent at 42: 53–56.  The specification of the '325 Patent recites dozens of embodiments of the claimed result, accomplished by a variety of existing technologies, as discussed above, but does not purport to make any improvements to them.

The Court also distinguished the asserted claims over those in Enfish and other cases.  The Court pointed out that, in Enfish for instance, the court found that the claims about a database management system were not directed to any form of storing tabular data, but rather to a specific self-referential table.  The Court here further noted that, unlike the specific sensor configuration/method and the specific improvements to computer memory claimed in Thales Visionix Inc. v. United States and Visual Memory LLV v. NVIDIA Corp., respectively, the claimed invention here provided no such improvement to computer technology or specific configuration/method for achieving its desired result.

Instead, the Court analogized the asserted claims to Federal Circuit cases pointed to by Niantic, such as Electric Power Group, LLC v. Alstom S.A., In re Morsa (finding claims for customizing information based on user information and other specific data to be abstract), and Move, Inc. v. Real Estate All. Ltd. (finding claims about displaying real estate properties based on a user-selected area of a map were directed to an abstract idea of collecting, organizing, manipulating, and displaying data and were "devoid of any implementation details").

The Court concluded its part one analysis stating that the claims are directed to an abstract idea because "computers are simply invoked as a tool for solving a problem that has predated them: integrating real-world information about a user into a virtual model."

Regarding part two of the Alice test, Barbaro had argued that integrating real-world information into a virtual world such as a video game solves a uniquely technical problem.  But the Court was quick to note that the concept of building models of real-world locations, and integrating the user's location or a user avatar into such models "long predates computers," and that the framing of Barbaro's argument "ignores the fact that computer games were not the original virtual worlds" (emphasis in original).  And as we've seen before in § 101 cases, this Court found the lack of technological details in the claims and specification -- that is, any details beyond mere instructions to apply a "pre-Internet abstract idea" using generic computer components -- to be fatal to the claims' validity.

Thus, the Court found the asserted claims to be patent ineligible under § 101.

Barbaro Technologies, LLC v. Niantic, Inc. (N.D. Cal. 2020)
Order Granting Motion for Judgment on the Pleadings by District Judge Seeborg

Uniloc USA, Inc. v. LG Electronics USA, Inc. (Fed. Cir. 2020)

By Michael Borella --

Uniloc, owner of U.S. Patent No. 6,993,049, brought an action for infringement of that patent against LG in the Northern District of California.  The District Court granted LG's motion to dismiss on the pleadings, agreeing with LG that the claims were directed to patent-ineligible subject matter under 35 U.S.C. § 101.  Uniloc appealed.

The patented technology relates to Bluetooth-enabled and similar networks.  These networks involve a primary station and at least one secondary station that form ad hoc networks (piconets) with one another.  Joining such a network involves an inquiry procedure, in which primary stations identify secondary stations and the secondary stations can request to join the piconet, and a page procedure, in which a primary station can invite the secondary stations to join the piconet.  According to the patent, "it can take several tens of seconds to complete the inquiry and page procedures so that a device joins a piconet and is able to transfer user input to the primary station."

Further, secondary stations can be battery operated, and may enter a low-power "park" mode by stopping active communication with the primary station.  A parked station must be polled in order to restore its ability to communicate with the primary station.  This polling process may also take several tens of seconds.

The patent explains that this delay can be reduced by adding a data field for polling as part of the inquiry message.  This allows inquiries and polls to occur simultaneously for a parked station, thereby reducing the polling delays.

At issue was claim 2 of the patent, which recites:

A primary station for use in a communications system comprising at least one secondary station, wherein means are provided
    for broadcasting a series of inquiry messages, each in the form of a plurality of predetermined data fields arranged according to a first communications protocol, and
    for adding to each inquiry message prior to transmission an additional data field for polling at least one secondary station.

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

Notably, the proper application of this test has been inconsistently defined and is confusing in practice.  A potentially more workable definition is that a claim is directed to an abstract idea if all of its elements are either non-specific, address a non-technical problem, or known in the art.  Thus, in order for a claim to be successful under § 101, it should have three qualities:  specificity, a technical problem that it solves, and some degree of novelty.

In any event, the District Court found claim 2 ineligible because of its allegedly being "directed to the abstract idea of additional polling in a wireless communication system."  The District Court found the claim to be analogous to those that failed the § 101 test in Two-Way Media Ltd. v. Comcast Cable Communications and Digitech Image Technologies, LLC v. Electronics for Imaging, Inc.

The Federal Circuit began its analysis by observing that the § 101 inquiry "often turns on whether the claims focus on specific asserted improvements in computer capabilities or . . . an abstract idea for which computers are invoked merely as a tool."  The Court went on to reiterate a point that it has made in a number of previous cases, that software claims can be eligible when "they are directed to improvements to the functionality of a computer or network platform itself."

Here, the Court rapidly concluded that this was the case for claim 2, as the claimed invention involves "the reduction of latency experienced by parked secondary stations in communication systems."  Notably, the additional data field facilitates this improvement and changes the normal operation of the communication itself "to overcome a problem specifically arising in the realm of computer networks."

LG did not dispute that the invention provided this improvement.  Instead, it contended that the claims did not focus specifically enough on the improvement, and instead used "result-based functional language."  LG also relied on the aforementioned Two-Way Media and Digitech cases.

The Federal Circuit disagreed.  It explained that the claims in Two-Way Media and Digitech were found lacking because the claim language did not include the purported technical advances described in their respective specifications.  In contrast, the Court found that claim 2 changed "the manner of transmitting data [to result] in reduced response time by peripheral devices which are part of the claimed system."

The Court also stated that:

To the extent LG argues that the claims themselves must expressly mention the reduced latency achieved by the claimed system, LG is in error.  Claims need not articulate the advantages of the claimed combinations to be eligible.

Further, the Court also made some general statements about software patent eligibility:

The claimed invention's compatibility with conventional communication systems does not render it abstract.  Nor does the fact that the improvement is not defined by reference to "physical" components.  . . .  Our precedent is clear that software can make patent-eligible improvements to computer technology, and related claims are eligible as long as they are directed to non-abstract improvements to the functionality of a computer or network platform itself.

For these reasons, the Federal Circuit ruled that claim 2 met the requirements of § 101 and passed the first part of the Alice test.  Therefore, the second part of the test need not be carried out.

Uniloc USA, Inc. v. LG Electronics USA, Inc. (Fed. Cir. 2020)
Panel: Circuit Judges Moore, Reyna, and Taranto
Opinion by Circuit Judge Moore

In re Rudy (Fed. Cir. 2020)

Claims Directed to Selecting Fishing Hooks for Use Are Not Patentable

By Joseph Herndon --

Christopher John Rudy, represented pro se, appealed from a decision of the Patent Trial and Appeal Board ("Board") affirming the rejection of claims 34, 35, 37, 38, 40, and 45–49 of U.S. Patent Application No. 07/425,360 ("the '360 application") as ineligible for patenting under 35 U.S.C. § 101.  On April 24, 2020, the U.S. Court of Appeals for the Federal Circuit issued a decision affirming the Board's conclusion.

Mr. Rudy originally filed the '360 application on October 21, 1989, and so, somehow, it has been pending for almost 31 years!

The application, entitled "Eyeless, Knotless, Colorable and/or Translucent/Transparent Fishing Hooks with Associatable Apparatus and Methods," has undergone a lengthy prosecution, including numerous amendments and petitions, four Board appeals, and a previous trip to the Federal Circuit, in which the Court affirmed the obviousness of all claims then on appeal.  In re Rudy, 558 F. App'x. 1011 (Fed. Cir. 2014).

Now, claims 34, 35, 37, 38, 40, and 45–49 of the '360 application stand rejected as ineligible for patenting under 35 U.S.C. § 101.  Claims 26–33 and 54–60 stand allowed and all remaining claims of the '360 application have been cancelled by the applicant.

Of the rejected claims, claim 34 is illustrative and recites the following:

34.  A method for fishing comprising steps of
    (1) observing clarity of water to be fished to deter-mine whether the water is clear, stained, or muddy,
    (2) measuring light transmittance at a depth in the water where a fishing hook is to be placed, and then
    (3) selecting a colored or colorless quality of the fishing hook to be used by matching the observed water conditions ((1) and (2)) with a color or color-less quality which has been previously determined to be less attractive under said conditions than those pointed out by the following correlation for fish-attractive non-fluorescent colors:

The Federal Circuit followed the two-step framework for assessing patent eligibility under § 101, and noted that it is not bound by the Office Guidance, which cannot modify or supplant the Supreme Court's law regarding patent eligibility.

Thus, despite a portion of the Board's analysis being framed as a recitation of the Office Guidance, in this particular case, the Federal Circuit found that the Board's reasoning and conclusion are nevertheless fully in accord with the relevant caselaw.

Applying the Supreme Court's two-step framework, the Federal Circuit first determined whether the claims at issue are directed to a patent-ineligible concept, such as an abstract idea or a law of nature.  The Federal Circuit found that claim 34 is directed to the abstract idea of selecting a fishing hook based on observed water conditions, which is a mental process of hook color selection based on a provided chart.

The Federal Circuit has held in the computer context that "collecting information" and "analyzing" that information are within the realm of abstract ideas, and the Court stated that the same is true in other contexts, including the fishing context.

The Court stated that claim 34 requires nothing more than collecting information (water clarity and light transmittance) and analyzing that information (by applying the chart included in the claim), which collectively amount to the abstract idea of selecting a fishing hook based on the observed water conditions.

Mr. Rudy stated in his brief that "all that is required of the angler is observation, measuring, and comparison with a predetermined chart."  Mr. Rudy continued, "even a fish can distinguish and select colors . . . the fisherman can do this too."  The Federal Circuit explicitly declined "to adopt a bright-line test that mental processes capable of being performed by fish are not patent eligible," but noted that such an observation underscores the conclusion that claim 34 is directed to the abstract idea of selecting the color of a fishing hook.

Having concluded that claim 34 is directed to the abstract idea of selecting a fishing hook based on observed water conditions, the Federal Circuit turned to step two of the inquiry and asked whether the elements of the claim, either individually or as an ordered combination, transform the nature of the claim into a patent eligible application of that abstract idea.

In this case, the three elements of the claim (observing water clarity, measuring light transmittance, and selecting the color of the hook to be used) are each themselves abstract, being mental processes akin to data collection or analysis.  Considered as an ordered combination, these three steps merely repeat the abstract idea of selecting a fishing hook based on observed water conditions.

The Federal Circuit made quick work here to determine that claim 34 fails to recite an inventive concept at step two of the test.

Thus, the Board affirmed the decision by the Board that the claims on appeal are ineligible for patenting.

In re Rudy (Fed. Cir. 2020)
Panel: Chief Judge Prost and Circuit Judges O'Malley and Taranto
Opinion by Circuit Judge Prost

USPTO Assesses the Impact of Patent Eligibility's Changing Landscape

By Michael Borella --

In a post-truth world, it is more tempting than ever to evaluate data based on gut instinct, intuition, and anecdotal evidence.  It is thus refreshing when results of a robust statistical analysis are published, even if the response to the ultimate outcome is, "Yeah, we knew that."

Case in point, patent eligibility.  Most patent practitioners are likely to agree that the Supreme Court's Alice Corp. v. CLS Bank decision made it more likely to receive 35 U.S.C. § 101 rejections during prosecution before the U.S. Patent and Trademark Office (USPTO).  Many of these practitioners would also likely concede that Alice made it less predictable as to whether a given claimed invention would run into eligibility issues.  These same practitioners would probably concur that the Federal Circuit's Berkheimer v. HP case as well as the USPTO's 2019 patent eligibility guidance (PEG) made it less likely to receive such a rejection and resulted in the eligibility inquiry being more predictable.

But most of this is anecdotal.  It is easy to find data supporting the premise that § 101 rejection rates went up after Alice and down after each of Berkheimer and the PEG.  But does this data withstand a rigorous examination?  Thanks to the USPTO's economists, the answer is yes.

Last week the U.S. Patent and Trademark Office published a study of how the patent eligibility landscape has changed within its art units over the last six years, with emphasis on the inflection points of Alice, Berkheimer, and the PEG.

Methodology

The USPTO identified Alice-affected technologies by considering patents litigated in the Supreme Court and Federal Circuit for which eligibility was at issue.  The USPTO's U.S. Patent Classifications for the associated applications were used to identify the Alice-affected technologies, and all other U.S. Patent Classifications were used as the control group.

Two main metrics were considered -- percentage of first-action § 101 rejections and § 101 examination uncertainty.  The former is a simple quotient of first-action § 101 rejections over all first office actions in the Alice-affected technology areas within a defined time period.  The latter is a bit more complicated.  First, the rate of first-action § 101 rejections for each examiner is determined over the time period.  Then, the variance of these per-examiner rates was calculated.  The § 101 examination uncertainty metric was the average of these variances.[1]  Similar metrics were found for the control group.

The Alice Decision

In Alice, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But, elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.

From the data, it is clear that Alice had a statistically significant impact on § 101 rejections.  In the Alice-affected technology areas, the likelihood of receiving a first-action § 101 rejection increased by 31% in the 18 months following the opinion's publication.  Also, Alice increased the § 101 examination uncertainty metric by 26% in these technology areas during the same period.

The Berkheimer Decision

While the Alice two-part inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.  Berkheimer stands for the notion that when such factual issues are present, a patent application cannot be found ineligible without further review.

Berkheimer resulted in the first-action § 101 rejection rate in the Alice-affected technology areas dropping from about 35% during March of 2018 to about 28% in early January of 2019.  Further, the uncertainty metric also fell from about 0.12 (its highest point since Alice) to about 0.9 in this time frame.  As a point of reference, in the months before Alice, the uncertainty metric was slightly below 0.9.

The PEG

In a nutshell, the PEG breaks the first part of the Alice test into two sub-steps.  In the former, one determines whether the claim recites a judicial exception, such as an abstract idea.  In the latter, one determines further "whether the recited judicial exception is integrated into a practical application of that exception."  To focus the analysis, the PEG indicates that all abstract ideas should fall into one of three categories:  mathematical concepts, certain methods of organizing human activity, and mental processes.  Think of these as the "Three M's" -- math, money, and mental steps.

Similar to Berkheimer, the PEG reduced both the first-action § 101 rejection rate and the uncertainty metric.  The first-action § 101 rejection rate fell steeply in the Alice-affected technology areas, from about 28% to about 18%.  The uncertainty metric dropped from about 0.9 to about 0.5, the latter its lowest point in the decade since Bilski v. Kappos.  Thus, the overall impact of the PEG was greater than that of Berkheimer.

Analysis

Given the lack of surprising results in this study, it is tempting to just yawn and say, "So what?"  To some extent, doing so would not be unwarranted -- the PEG caused a huge reduction in § 101 rejections and uncertainty -- but the Federal Circuit has explicitly stated that it is not bound by the USPTO's guidance.  The USPTO can pat itself on the back for its efforts in providing more consistent and predictable examination with the PEG, but that ultimately may not matter when the federal courts will apply a less patent-friendly test when determining whether to invalidate patents that the USPTO granted.

But perhaps the most telling aspect of the study is not the data, but instead in the casual way that the authors describe the uncertainty surrounding § 101 and its potential impact on the economy.  Particularly, they take it as given that Alice "created uncertainty in the business and legal communities" and that "[a]mbiguity in the language . . . and in the scope of technologies involving abstract ideas made it difficult to predict how and where the standard would be applied."

These statements reflect those of federal judges, former federal judges, certain members of Congress, the inventor community, patent professionals, and (of course) USPTO Director Iancu.  There is widespread consensus that Alice's unclear language is problematic and has made it riskier for small and medium-sized businesses to invest to protect their inventions.  Under Alice, patent applications can be rejected (and granted patents can be invalidated) based on subjective and conclusory reasoning.  But perhaps Alice is yet another cynical by-product of the post-truth narrative, where opinions and gut feelings trump objective facts.

[1] It is not clear from the study whether this average was weighted by the number of first actions per examiner.  Arguably, it should have been so that more active examiners had more influence over the metric than less active examiners.