Patent Docs

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

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

By Joseph Herndon --

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

Background

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

The '755 Patent

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

Claim 1 recites:

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

Analysis

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

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

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

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

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

The Court issued yet another strong opinion:

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

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

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

Commentary

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

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

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

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

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

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

By Donald Zuhn --

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

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

Asserted claim 1 of the '722 patent recites:

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

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

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

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

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

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

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

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

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

By Donald Zuhn --

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

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

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

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

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

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

Asserted claim 31 also recites:

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

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

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

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

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

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

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

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

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

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

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

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

Congress Releases Framework for Section 101 Reform

By Kevin E. Noonan --

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

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

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

The framework has the following provisions:

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

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

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

▪ Fundamental scientific principles;

▪ Products that exist solely and exclusively in nature;

▪ Pure mathematical formulas;

▪ Economic or commercial principles;

▪ Mental activities.

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

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

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

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

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

Invitation to Join Amicus Brief in Athena Diagnostics v. Mayo

By Sherry M. Knowles --

Athena Diagnostics filed a Petition for Rehearing of the CAFC decision in Athena Diagnostics v. Mayo on April 8, 2019.  Amicus Briefs are due April 22, 2019.  Patent Docs has reported on this decision, which continues to apply U.S. Supreme Court-created common law to the analysis of 35 U.S.C. § 101.

Knowles IP Strategies LLC (Sherry M. Knowles) and AddyHart (Meredith Addy) intend to file an Amicus Brief in support of neither party but requesting that the CAFC carry out its constitutional duty to apply strict statutory construction of the literal words of 35 U.S.C. § 101 to decide the case (see "Unconstitutional Application of 35 U.S.C. § 101 by the U.S. Supreme Court," 18 J. Marshall Rev. Intell. Prop. L. 144 (2018), which was discussed and can be accessed here).

As with other recent CAFC and U.S. Supreme Court cases on patent eligibility, the Athena decision omits an appropriate analysis of the wording of the statute it is applying ("Whoever invents or discovers"), and its opinion is inconsistent with the wording of the statute.  Instead, it applies judicial exceptions to the statute, which have been created by the U.S. Supreme Court as elaborated in its new common law on the subject.  However, as recently well stated by the U.S. Supreme Court in Henry Schein, Inc. v. Archer & White, Inc. (No. 17-1272; January 8, 2019):  "This Court may not engraft its own exceptions onto the statutory text".

If your institution or company or you are interested in joining this brief, please send a request to amicus@kipsllc.com by April 17, 2019.  The U.S. Constitution is not self-enforcing.  The people and institutions of the United States must demand it.

Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2019)

By Donald Zuhn --

Last week, in Cleveland Clinic Foundation v. True Health Diagnostics LLC, the Federal Circuit affirmed a decision by the U.S. District Court for the Eastern District of Virginia holding claim 1 of U.S. Patent No. 9,575,065 and claims 1 and 2 of U.S. Patent No. 9,581,597 invalid under 35 U.S.C. § 101 as directed to an ineligible natural law.  Finding the asserted claims to be patent ineligible, the District Court had dismissed a complaint for patent infringement filed by Cleveland Clinic Foundation and Cleveland HeartLab, Inc. ("Cleveland Clinic") against True Health Diagnostics LLC under Rule 12(b)(6) (see "Cleveland Clinic Foundation v. True Health Diagnostics, LLC (E.D. Va. 2017)").  In affirming the District Court, the Federal Circuit determined that its precedent, and not the U.S. Patent and Trademark Office's guidance, must control.

The '065 and '597 patents disclose "diagnostic test[s] which can be used to determine whether an individual . . . is at a lower risk or higher risk of developing or having cardiovascular disease," which are "based on the discovery that patients with coronary artery disease (CAD) have significantly greater levels of leukocyte and blood myeloperoxidase (MPO) levels" ('065 patent, col. 1, ll. 21–25, and col. 2, ll. 36-39).  The sole claim of the '065 patent recites:

1.  A method of detecting elevated MPO mass in a patient sample comprising:
    a)  obtaining a plasma sample from a human patient having atherosclerotic cardiovascular disease (CVD); and
    b)  detecting elevated MPO mass in said plasma sample, as compared to a control MPO mass level from the general population or apparently healthy subjects, by contacting said plasma sample with anti-MPO antibodies and detecting binding between MPO in said plasma sample and said anti-MPO antibodies.

The only two claims of the '597 patent recite:

1.  A method for identifying an elevated myeloperoxidase (MPO) concentration in a plasma sample from a human subject with atherosclerotic cardiovascular disease comprising:
    a)  contacting a sample with an anti-MPO antibody, wherein said sample is a plasma sample from a human subject having atherosclerotic cardiovascular disease;
    b)  spectrophotometrically detecting MPO levels in said plasma sample;
    c)  comparing said MPO levels in said plasma sample to a standard curve generated with known amounts of MPO to determine the MPO concentration in said sample; and
    d)  comparing said MPO concentration in said plasma sample from said human subject to a control MPO concentration from apparently healthy human subjects, and identifying said MPO concentration in said plasma sample from said human subject as being elevated compared to said control MPO concentration.

2.  The method of claim 1, further comprising, prior to step a), centrifuging an anti-coagulated blood sample from said human subject to generate said plasma sample.

The opinion notes that the Federal Circuit had previously addressed the subject matter eligibility of a parent patent, U.S. Patent No. 7,223,552, in Cleveland Clinic Foundation v. True Health Diagnostics, LLC, 859 F.3d 1352 (Fed. Cir. 2017) ("Cleveland Clinic I"), in which the Court affirmed a motion to dismiss granted by the District Court for the Northern District of Ohio, which in turn found the asserted claims of four Cleveland Clinic patents, including the '552 patent, as being directed to patent-ineligible subject matter.  Claim 11 of the '552 patent, which the opinion notes is exemplary, recites:

11.  A method of assessing a test subject's risk of having atherosclerotic cardiovascular disease, comprising
    comparing levels of myeloperoxidase in a bodily sample from the test subject with levels of myeloperoxidase in comparable bodily samples from control subjects diagnosed as not having the disease, said bodily sample being blood, serum, plasma, blood leukocytes selected from the group consisting of neutrophils, monocytes, sub-populations of neutrophils, and sub-populations of monocytes, or any combination thereo[f];
    wherein the levels of myeloperoxidase in the bodily [samples] from the test subject relative to the levels of [m]yeloperoxidase in the comparable bodily samples from control subjects is indicative of the extent of the test subject's risk of having atherosclerotic cardiovascular disease.

The opinion also notes that In Cleveland Clinic I, the Court held the methods of the '552 patent invalid under § 101 as being "directed to the ineligible natural law that blood MPO levels correlate with atherosclerotic CVD," and also held that "because the patent did not purport to have invented any of the biological techniques used to detect MPO or the statistical methods used to compare a patient's MPO levels to the control group, the claims recited no further inventive concept sufficient to transform the nature of the claims into a patent-eligible application of the natural law."  According to the opinion, the asserted claims of the '065 and '597 patents recite methods of identifying and detecting MPO, in contrast to the method of assessing atherosclerotic CVD risk from blood MPO levels in the '552 patent.

On appeal, Cleveland Clinic argued that the claims are not directed to a natural law, but to the technique of using an immunoassay to measure the blood MPO levels of patients with atherosclerotic CVD, that the correlation between blood MPO levels and atherosclerotic CVD is not a natural law because it can only be detected using certain techniques (since prior art techniques were too invasive or failed to predict CVD risk), and that using an immunoassay to detect the correlation between blood MPO levels and atherosclerotic CVD supplies an inventive concept sufficient to transform the claims into patent-eligible subject matter.  True Health countered by arguing that the correlation between atherosclerotic CVD and blood MPO levels is a natural law because it exists in nature apart from human intervention and that using known techniques in a standard way to observe a natural law neither renders the claims directed to something other than the natural law nor supplies an additional inventive concept.

The Federal Circuit agreed with True Health, concluding as the Court did in Cleveland Clinic I that the claims are directed to the natural law that blood MPO levels correlate with atherosclerotic CVD.  In response to Cleveland Clinic's argument that the claims of the '552 patent, which were previously found to be invalid as patent-ineligible, could be distinguished from the claims of the '065 and '597 patents because the former are directed to methods of "assessing a test subject's risk of having atherosclerotic [CVD]" by comparing the subject's MPO levels to a control group, and the latter are directed to "techniques for detecting elevated levels of MPO in the blood of patients having CVD," the Federal Circuit found this distinction (quoting the District Court) to be "overly superficial."  The opinion explains that the asserted claims:

[A]re not directed to new techniques for performing an immunoassay to detect a patient's blood MPO levels.  They only recite applying known methods to detect MPO levels in plasma, comparing them to standard MPO levels, and reaching a conclusion:  that the patient's blood MPO levels are elevated in comparison to a control group.  This conclusion is simply another articulation of the natural law that blood MPO levels correlate with atherosclerotic CVD.  Thus, as we held in Cleveland Clinic I, the claims are directed to the patent-ineligible natural law that blood MPO levels correlate with risk of atherosclerotic CVD.

The Federal Circuit also disagreed with Cleveland Clinic's argument that the correlation of blood MPO levels with atherosclerotic CVD is not a natural law because blood MPO levels can only be observed using certain techniques, stating that "[i]nadequate measures of detection do not render a natural law any less natural."  The Court also found Cleveland Clinic's argument that the inventive concept was supplied by using an immunoassay to detect the correlation between blood MPO levels and atherosclerotic CVD to be unpersuasive, stating that the argument that "using a known technique in a standard way to observe a natural law can confer an inventive concept—has been consistently rejected by this court in circumstances nearly identical to this case" (citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743, 747 (Fed. Cir. 2019), and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015)).

On appeal, Cleveland Clinic also argued that the District Court failed to give the appropriate deference to the subject matter eligibility guidance published by the U.S. Patent and Trademark Office, as required by Skidmore v. Swift & Co., 323 U.S. 134 (1944), and also erred by not granting Skidmore deference to the Examiner's decision to allow the '065 and '597 patent applications in light that guidance.  As was noted by the District Court in its opinion, during prosecution of the application that issued as the '065 patent, the Examiner initially rejected the claims under 35 U.S.C. § 101 as being directed to an unpatentable abstract idea.  Cleveland Clinic overcame that rejection by citing Example 29 of the U.S. Patent and Trademark Office's "May 2016 Subject Matter Eligibility Update" (see "Subject Matter Eligibility Guidance -- Example on Diagnosing and Treating Julitis").  Example 29 sets forth seven claims directed to the detection of a hypothetical protein, JUL-1, and the diagnosis and/or treatment of a hypothetical autoimmune disease, julitis.  The first two claims of Example 29 recite:

1.  A method of detecting JUL-1 in a patient, said method comprising:
    a.  obtaining a plasma sample from a human patient; and
    b.  detecting whether JUL-1 is present in the plasma sample by contacting the plasma sample with an anti-JUL-1 antibody and detecting binding between JUL-1 and the antibody.

2.  A method of diagnosing julitis in a patient, said method comprising:
    a.  obtaining a plasma sample from a human patient;
    b.  detecting whether JUL-1 is present in the plasma sample by contacting the plasma sample with an anti-JUL-1 antibody and detecting binding between JUL-1 and the antibody; and
    c.  diagnosing the patient with julitis when the presence of JUL-1 in the plasma sample is detected.

According to Example 29, claim 1 is considered to be patent eligible and claim 2 is considered to be patent ineligible.  The Example explains that claim 1 is eligible because steps (a) and (b) of the claim "do not recite or describe any recognized exception."  As a result, the analysis of this claim ends with Step 2A of analytic framework set forth in the Interim Guidance (i.e., determining whether the claim is directed to a judicial exception), and the Example notes that there is no need to proceed with Step 2B of the analytic framework (i.e., determining whether any element, or combination of elements, in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exception).

In overcoming the § 101 rejection, Cleveland Clinic argued that the rejected claims more closely resembled claim 1 of Example 29 as opposed to exemplary claim 2 because the rejected claims were directed to a method of detecting myeloperoxidase rather than a method of diagnosing atherosclerotic cardiovascular disease.  The Examiner withdrew the rejection and the '065 patent proceeded to issuance.  As for the '597 patent, which was similarly rejected under § 101 as being directed to patent ineligible subject matter, Cleveland Clinic overcame the rejection by citing Example 29 and arguing that the claims amount to significantly more than the judicial exception.

On appeal, True Health countered that the USPTO guidance is neither persuasive nor relevant to the eligibility of the asserted claims, and that the District Court correctly found that claim 1 of Example 29 of the USPTO guidance is directed to a method of detecting a protein in a plasma sample without linking the results to a disease or other natural phenomenon.

With respect to Cleveland Clinic's argument that the District Court failed to give the appropriate deference to the USPTO's guidance, the Federal Circuit agreed with True Health that the District Court did not err in finding the asserted claims ineligible, stating that:

While we greatly respect the PTO's expertise on all matters relating to patentability, including patent eligibility, we are not bound by its guidance.  And, especially regarding the issue of patent eligibility and the efforts of the courts to determine the distinction between claims directed to natural laws and those directed to patent-eligible applications of those laws, we are mindful of the need for consistent application of our case law.

The Court also noted that claim 1 of Example 29 of the guidance "is strikingly similar to claim 1 of U.S. Patent 6,258,540 at issue in Ariosa."  Claim 1 of the '540 patent recites:

1.  A method for detecting a paternally inherited nucleic acid of fetal origin performed on a maternal serum or plasma sample from a pregnant female, which method comprises
    amplifying a paternally inherited nucleic acid from the serum or plasma sample and
    detecting the presence of a paternally inherited nucleic acid of fetal origin in the sample.

Thus, the Court declared that:

We have considered Example 29 and the arguments relating to it, but to the extent that Example 29–Claim 1 is analogous to the claims at issue, Ariosa must control.  Accordingly, we decline to follow the PTO's Example 29–Claim 1 and conclude that the district court did not err in its consideration of the PTO's subject matter eligibility guidance.

Thus, the Court determined that the District Court correctly concluded that the asserted claims are directed to a natural law and recite no other inventive concept, and therefore affirmed the District Court's decision finding the claims to be patent ineligible and dismissing Cleveland Clinic's complaint.

Cleveland Clinic Foundation v. True Health Diagnostics LLC (Fed. Cir. 2019)
Nonprecedential disposition
Panel:  Circuit Judges Lourie, Moore, and Wallach
Opinion by Circuit Judge Lourie

Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2019)

By Donald Zuhn --

Last week, in Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc., the Federal Circuit reversed a decision by the U.S. District Court for the District of Delaware holding the claims of U.S. Patent No. 8,808,737 to be ineligible under 35 U.S.C. § 101.  In reversing the District Court, the Federal Circuit determined that the asserted claims of the '737 patent are legally indistinguishable from the claims at issue in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd.

The '737 patent, which is owned by Endo Pharmaceuticals Inc., relates to a method of using oxymorphone to treat pain in patients with impaired kidney function.  As the opinion notes, a patient's pain relief level can be impacted by the way the patient's body processes oxymorphone.  In patients with impaired kidney function (or renal impairment), waste products and drugs that are typically filtered by the kidneys can build up.  The inventor of the '737 patent studied the effect of renal impairment on the metabolism of oxymorphone and discovered that patients with moderately or severely impaired kidney function required less oxymorphone to achieve the same level of pain management achieved in patients without impaired kidney function.  Claim 1 of the '737 patent is representative (with emphasis in the opinion):

1.  A method of treating pain in a renally impaired patient, comprising the steps of:
    a.  providing a solid oral controlled release dosage form, comprising:
        i.  about 5 mg to about 80 mg of oxymorphone or a pharmaceutically acceptable salt thereof as the sole active ingredient; and
        ii.  a controlled release matrix;
    b.  measuring a creatinine clearance rate of the patient and determining it to be
        (a) less than about 30 m[L]/min,
        (b) about 30 mL/min to about 50 mL/min,
        (c) about 51 mL/min to about 80 mL/min, or
        (d) above about 80 mL/min; and
    c.  orally administering to said patient, in dependence on which creatinine clearance rate is found, a lower dosage of the dosage form to provide pain relief;
    wherein after said administration to said patient, the average AUC of oxymorphone over a 12-hour period is less than about 21 ng•hr/mL.

Endo and Mallinckrodt LLC filed suit against Actavis LLC, Actavis South Atlantic LLC, Actavis Pharma, Inc., Actavis Elizabeth LLC, Actavis Holdco U.S., Inc. ("Actavis") and Teva Pharmaceuticals USA, Inc. and Barr Laboratories, Inc. ("Teva") for infringement of claims 1-6 of the '737 patent.  Actavis moved to dismiss Endo's patent infringement claims, arguing that the asserted claims were patent ineligible under § 101.  The Magistrate Judge issued a Report and Recommendation, recommending that the District Court grant Actavis' motion.

In that Report, the Magistrate applied the two-step analysis set forth in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012), and reiterated in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014).  With respect to step 1 of the Alice/Mayo test, the Magistrate determined that the claims are directed to the natural law that the bioavailability of oxymorphone is increased in people with severe renal impairment.  With respect to step 2, the Magistrate determined that claim 1 consists of three steps: (1) a "providing" step; (2) a "measuring/determining" step; (3) and an "administering" step.  The Magistrate concluded that the "providing" step is similar to the administering step in Mayo because it "merely identifies the specific drug for administration"; the "measuring/determining" step, as in Mayo, "just directs one to use a well-known method to measure creatinine levels to obtain the necessary information to apply a law of nature"; and the "administering step" is indistinguishable from Mayo because it "simply limits the relevant audience to patients and prescribing physicians, who treat chronic or acute pain with oxymorphone," by "merely instruct[ing] physicians to dispense oxymorphone for the treatment of pain in a well-know[n] manner, while utilizing the natural law to manage the dosage."  The Magistrate concluded that the patent was not directed to a patent-eligible application of a natural law.  Following the Magistrate's recommendation, the District Court granted Defendants' motion to dismiss.  Endo appealed the District Court's decision holding the claims of the '737 patent to be patent ineligible.

The Federal Circuit began by noting that while the Supreme Court has established a two-step framework to determine subject matter eligibility under § 101, "[i]f the claims are not directed to a patent-ineligible concept at step one, [the Court] need not address step two of the inquiry," citing Enfish, LLC v. Microsoft Corp.  The Court determined that this was the case here, explaining that the Court's analysis accordingly "focuse[d] solely on step one."  Citing Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., the opinion notes that "at step one, '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.''"  And in the instant case, the Court concluded that the asserted claims are not directed to patent-ineligible subject matter, but rather "are directed to a patent-eligible method of using oxymorphone or a pharmaceutically acceptable salt thereof to treat pain in a renally impaired patient."

As in the Federal Circuit's recent decision in Natural Alternatives International, Inc. v. Creative Compounds, LLC, the Endo Court noted that the Federal Circuit held similar claims to be patent-eligible in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd., explaining that:

The claims at issue here are legally indistinguishable from the representative claim in Vanda.  Both claims recite a method for treating a patient.  The Vanda patent claims recite the steps of carrying out a dosage regimen based on the results of genetic testing.  . . .  Here, the claims similarly recite the steps of carrying out a dosage regimen, though the steps are based on the results of kidney function testing.  Additionally, the claims in both cases require specific treatment steps.  . . .  [And therefore, l]ike the claims in Vanda, the claims here "are directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome."  See Vanda, 887 F.3d at 1136.

The panel also noted that "like the claims in Vanda, the claims here differ from those in Mayo in material respects," pointing out that "[a]lthough the representative claim in Mayo recited administering a thiopurine drug to a patient, the claim as a whole was not directed to the application of a drug to treat a particular disease."  (In a footnote, the Court also acknowledged that when the District Court held the asserted claims of the '737 patent to be ineligible, it did not have the benefit of considering the Federal Circuit's decisions in Vanda or Natural Alternatives).

The panel next turned to Actavis' arguments that the Endo claims were similar to those at issue in Mayo and could be distinguished from the claims found to be patent eligible in Vanda.  With respect to Actavis' argument that unlike the claims in Vanda, the method steps in the Endo claims offer no "practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself," the Court disagreed, stating that "the '737 patent claims are very similar to those in Vanda and any differences in specificity are not of a sufficient degree to convince us to conclude that the claims here should be ineligible as compared to the claims in Vanda."  As for Actavis' argument that unlike the Vanda claims, the Endo claims do not require that a biological sample be obtained or assayed in any particular way to determine a patient's creatinine-clearance rate, the Court declared that "this is a distinction without a difference," since "[t]he court in Vanda reasoned that the claim was directed to 'specific patients,' without explicitly emphasizing the precise methods used to identify those specific patients."  The Court also disagreed with Actavis' argument that unlike the Vanda claims, the Endo claims "do not specify an amount or frequency of oxymorphone to be administered after patients are categorized by creatinine-clearance rate," noting that "the combination of the administering step and wherein clause claim language, taken together, . . . make the claims-at-issue as specific as those in Vanda such that the patent claims do not 'tie up the doctor’s subsequent treatment decision,'" citing Vanda, 887 F.3d at 1135 (quoting Mayo, 566 U.S. at 86).  The Court therefore concluded that:

[T]he '737 patent claims are like those in Vanda.  They are eligible because they are "directed to a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome."  . . .  Our precedent leaves no room for a different outcome.

The opinion found further support for its decision in Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., stating that:

We explained that "[t]he end result of the . . . claims is not simply an observation or detection of the ability of hepatocytes to survive multiple freeze-thaw cycles.  Rather, the claims [were] directed to a new and useful method of preserving hepatocyte cells."  We further emphasized that "the natural ability of the subject matter to undergo the process does not make the claim 'directed to' that natural ability."  Otherwise, claims directed to actually "treating cancer with chemotherapy" or "treating headaches with aspirin" would be patent ineligible.  Just like the claims in CellzDirect, the result of the claims here is not simply an observation or detection [citations omitted].

The Court concludes  the opinion by noting that neither Ariosa Diagnostics, Inc. v. Sequenom, Inc. nor Athena Diagnostics, Inc. v. Mayo Collaborative Servs., compel a different outcome, pointing out that "the claims here are directed to a treatment method, not a detection method," and adding that "[t]he '737 patent does not 'start[] and end[] with a naturally occurring phenomenon.'"  Thus, the Court determined that the '737 patent claims are not directed to patent-ineligible subject matter, and therefore reversed the District Court's decision finding the claims to be patent-ineligible.

Endo Pharmaceuticals Inc. v. Teva Pharmaceuticals USA, Inc. (Fed. Cir. 2019)
Panel:  Circuit Judges Wallach, Clevenger, and Stoll
Opinion by Circuit Judge Stoll

SRI International, Inc. v. Cisco Systems, Inc. (Fed. Cir. 2019)

Claims for Monitoring and Analyzing Suspicious Network Activity Found Patent Eligible

By James Korenchan --

In a precedential decision issued last week, the Federal Circuit affirmed the U.S. District Court for the District of Delaware's ruling that Plaintiff SRI International, Inc.'s ("SRI") claims related to network security are patent eligible.

Years ago, SRI sued Defendant Cisco Systems, Inc. ("Cisco") for infringement of U.S. Patent Nos. 6,711,615 (the '615 patent) and 6,484,203 (the '203 patent), after which Cisco unsuccessfully moved for summary judgement on various issues, including patent-ineligibility of the claims and whether one of SRI's papers on its own network security tool anticipates the claims.  Cisco then appealed the final judgement of the District Court with respect to these two issues, as well as issues relating to the District Court's construction of the claim term "network traffic data," denial of JMOL of no willful infringement, and grant of enhanced damages, attorneys' fees, and ongoing royalties.  This post addresses only the issue of patent eligibility, including a notable dissenting opinion by Judge Alan David Lourie.

The Majority Opinion

The majority opinion focuses on claim 1 of the '615 patent, which the Court adopted as representative.  The Court stated that claim 1 of the '615 patent and claim 1 of the '203 patent are "substantially similar" with differences that are not material to any issue on appeal.  The claimed invention is generally related to network surveillance for the purposes of security in an enterprise network.  For example, this can be accomplished by looking at packets that monitor data transfers, errors, or network connections, building statistical profiles based on packet measurements, using the profiles to determine whether there is suspicious activity, and notifying various hierarchically-related network monitors of the suspicious activity.

1.  A computer-automated method of hierarchical event monitoring and analysis within an enterprise network comprising:
    deploying a plurality of network monitors in the enterprise network; detecting, by the network monitors, suspicious network activity based on analysis of network traffic data selected from one or more of the following categories: {network packet data transfer commands, network packet data transfer errors, network packet data volume, network connection requests, network connection denials, error codes included in a network packet, network connection acknowledgements, and network packets indicative of well-known network-service protocols};
    generating, by the monitors, reports of said suspicious activity; and
    automatically receiving and integrating the reports of suspicious activity, by one or more hierarchical monitors.

In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-step framework for determining whether claims are directed to patent-eligible subject matter under § 101.  First, it must be decided whether a claim is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then it must be decided whether any element or combination of elements in the claim is sufficient to transform the nature of the claim into a patent-eligible application.  To transform an abstract idea into a patent-eligible application, the claims must do more than simply state an abstract idea and broadly recite applying the abstract idea.

In addressing the issue of patent eligibility, Cisco asserted that the claims are simply directed to a known business process of analyzing data from multiple sources to detect suspicious activity.  But the District Court held that the claims are "more complex" than that.  The District Court concluded that the claims recite a specific process rooted in computer technology -- namely, using network monitors that each monitor and analyze specific types of network data, and integrating reports produced by those monitors -- in order to solve a specific problem arising in the realm of network computing -- namely, detecting hackers or other unwanted activity in a network.  The Federal Circuit agreed.  Citing Enfish, the Court affirmed that the "'focus of the claims is on the specific asserted improvement in computer capabilities'—that is, providing a network defense system that monitors network traffic in real-time to automatically detect large-scale attacks."  For at least this reason, the Court agreed with the District Court's conclusion that the claims are not directed to an abstract idea and are thus patent eligible.

The Court also pointed to the specification in support of their conclusion.  For example, the specification explains that, in conventional networks, "seemingly localized triggering events can have globally disastrous effects on widely distributed systems," and purports to solve those issues by providing "a framework for the recognition of more global threats to interdomain connectivity, including coordinated attempts to infiltrate or destroy connectivity across an entire network enterprise."

Cisco provided three main arguments for why the claims are an abstract idea, but the Court refuted each of them.  First, Cisco argued that the claims are analogous to those in Electric Power Group in that they are allegedly directed to generic steps for collecting and analyzing data.  But the Court distinguished these claims from those in Electric Power Group, instead analogizing them to those in DDR Holdings.  In particular, the Court noted that, while the Electric Power Group claims "were drawn to using computers as tools to solve a power grid problem," the claims here, like those in DDR Holdings, "prevent the normal, expected operation of a conventional computer network" -- namely, by detecting and reporting on suspicious network activity, as well as by receiving and integrating the reports using one or more hierarchical network monitors.

Cisco also argued that the claims do not improve computer functionality, per Enfish.  The Court noted how, in Alice, the Supreme Court advised that, even if a claim directed to an abstract idea uses a computer as a tool, the claim still does not pass step one muster.  Using the Supreme Court's notion as a counter to Cisco's argument, the Court stated that the claims are not automating a conventional idea on a computer, but rather recite a specific process that improves the functioning of computer networks in the realm of network security.

Lastly, Cisco cited a variety of Federal Circuit decisions, such as Intellectual Ventures I LLC v. Symantec Corp. and CyberSource Corp. v. Retail Decisions, Inc., in asserting that the claims are so general that they involve steps that could be performed in one's mind.  But the Court disagreed yet again, noting:

This is not the type of human activity that § 101 is meant to exclude.  Indeed, we tend to agree with SRI that the human mind is not equipped to detect suspicious activity by using network monitors and analyzing network packets as recited by the claims.

As such, the Court concluded that the claims are not directed to an abstract idea and are thus patent eligible.  It did not conduct an analysis under step two of the Alice framework.

Judge Lourie's Dissent

Judge Lourie wrote a dissent that relied entirely on Electric Power Group.  Practitioners on the tech side of the fence are all too familiar with what might be perceived as an over-reliance on Electric Power Group for § 101 and might view Judge Lourie's dissent with the same skepticism as they've viewed many patent-eligibility issues.

He first noted that the method recited in Electric Power Group recited "[a] method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid," with the method comprising eight steps, including "receiving data," "detecting and analyzing events in real time," "displaying the event analysis results and diagnoses of events," "accumulating and updating measurements," and "deriving a composite indicator of reliability."  He emphasized that, despite having eight steps, the Court held that the Electric Power Group claim was an abstract idea without significantly more.  The claim involved selecting information for collection, analysis, and display, was only broadly rooted in computer technology, and, although limited to the context of power-grid monitoring, was still deemed to be patent ineligible.

Judge Lourie stated that these claims are "hardly distinguishable' from those in Electric Power Group, do not provide enough specifics as to how its steps are performed, show no improvement to computer technology, and are thus directed to the abstract idea of monitoring network security.  In particular, he opined that:

The claims here recite nothing more than deploying network monitors, detecting suspicious network activity, and generating and handling reports.  The detecting of the suspicious activity is based on "analysis" of traffic data, but the claims add nothing concerning specific means for doing so.  The claims only recite the moving of information.  The computer is used as a tool, and no improvement in computer technology is shown or claimed.  There is no specific technique described for improving computer network security.

Proceeding to step two, Judge Lourie asserted that, although the claims recite different types of information and information sources, the selection of information does not provide any inventive concept, and the specification indicates that the claims only rely on generic, "customary" computer components.

Judge Lourie was also not a fan of the majority's partial reliance on the '615 patent's specification:

[T]he majority opinion quotes from and paraphrases language from the specification that only recites results, not means for accomplishing them.  The claims as written, however, do not recite a specific way of enabling a computer to monitor network activity.  As we noted in Electric Power Group, result-focused, functional claims that effectively cover any solution to an identified problem, like those at issue here, frequently run afoul of Alice.  (citation omitted)

For these reasons, Judge Lourie strongly opposed the majority's ruling and would have found the claims to be patent ineligible.

SRI International, Inc. v. Cisco Systems, Inc. (Fed. Cir. 2019)
Panel:  Circuit Judges Lourie, O'Malley, and Stoll
Opinion by Circuit Judge Stoll; dissenting opinion by Circuit Judge Lourie

Ex parte Smith (PTAB 2019)

Software Claims Survive Section 101 Challenge and Are Found to Be Directed to Patent-Eligible Subject Matter

By Joseph Herndon --

In the U.S. Patent and Trademark Office, the Patent Trial and Appeal Board (PTAB) recently designated its decision in Ex Parte Smith as an informative decision for its application of the revised guidance on the application of 35 U.S.C. § 101.  (Ex parte Eileen C. Smith, Anthony Montesano, Edward T. Tilly, Mark A. Esposito, Stuart J. Kipnes, and Anthony J. Carone, Appeal 2018-000064, Technology Center 3600).

Below, we analyze the decision, which is favorable for applicants, to illustrate that even when claims are found to be directed to a judicial exception (e.g., abstract idea), they will survive section 101 challenges if additional elements in the claim integrate the judicial exception into a practical application.

The decision reviewed a rejection of claims under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter.  The claims are directed to a hybrid trading system for concurrently trading securities or derivatives through both electronic and open-outcry trading mechanisms.  Claim 1, reproduced below, is illustrative of the claimed subject matter:

1.  A method of trading derivatives in a hybrid exchange system comprising:
    collecting orders, via a communication network and order routing system, for derivatives and placing them in an electronic book database;
    identifying at an electronic trade engine a new quote from a first in-crowd market participant, wherein one of a bid or an offer price in the new quote matches a respective price in an order in the electronic book database from a public customer;
    removing at least a portion of the order in the electronic book database, delaying automatic execution of the new quote and the order, and starting a timer;
    reporting, via the communication network and an electronic reporting system, a market quote indicative of execution of the at least a portion of the order while delaying automatic execution;
    receiving at the electronic trade engine a second quote from a second in-crowd market participant after receiving the new quote from the first in-crowd market participant and before an expiration of the timer, wherein the second quote matches the respective price of the public customer order in the electronic book database; and
    allocating the order between the first and second in-crowd market participants at the electronic trade engine, wherein the order is not executed until expiration of the timer.

Standard for Patent Eligibility

The PTAB first noted the two-step test set forth by the Supreme Court in Alice, which includes first determining whether the claims at issue are directed to a patent-ineligible concept, and if so, secondly considering the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.

The USPTO recently published revised guidance on the application of § 101.  (USPTO's January 7, 2019 Memorandum, 2019 Revised Patent Subject Matter Eligibility Guidance).  Under that guidance, the USPTO indicated to first look to whether the claim recites:

(1) any judicial exceptions, including certain groupings of abstract ideas (i.e., mathematical concepts, certain methods of organizing human interactions such as a fundamental economic practice, or mental processes); and
(2) additional elements that integrate the judicial exception into a practical application. Only if a claim (1) recites a judicial exception and (2) does not integrate that exception into a practical application, do we then look to whether the claim:
(3) adds a specific limitation beyond the judicial exception that is not "well-understood, routine, conventional" in the field; or
(4) simply appends well-understood, routine, conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception.

Examiner's Findings and Conclusion

In the first step of the Alice inquiry, the Examiner determined that the claims were directed to the abstract idea of comparing new and stored information and using rules to identify options because the claims recite steps such as collecting, identifying, and reporting.  The Examiner further determined the claims are directed to an abstract idea of trading derivatives in a hybrid exchange system which is a concept within the realm of "fundamental economic practices".

At Alice step 2, the Examiner determined that the claims do not recite elements sufficient to amount to significantly more than the abstract idea because the computer as recited is a generic computer component that performs functions which are generic computer functions.

Board's Review

Applying the guidance set forth in the new USPTO Memorandum, the PTAB reversed the decision of the Examiner.

Like the Examiner, the PTAB first found that the limitations of claim 1, under their broadest reasonable interpretation, recite the fundamental economic practice of derivative trading because the limitations all recite the operations that would ordinarily take place in a derivatives trading environment.  Thus, like the concept of intermediated settlement in Alice, and the concept of hedging in Bilski, the concept of trading derivatives recited in the claims was found to be a fundamental economic practice long prevalent in our system of commerce.  Thus, the claims were found to recite a judicial exception of a fundamental economic practice.

Having determined that the claims recite a judicial exception and satisfied step 1 of the USPTO memo, the PTAB turned to determining whether there are "additional elements that integrate the judicial exception into a practical application."  Claim 1 recites various computer-related limitations, but at a high level without any meaningful detail about their structure or configuration.  As such, the PTAB did not find the computer-related limitations themselves to be sufficient to integrate the judicial exception into a practical application.

However, unlike the Examiner, the PTAB found that claim 1 also recites additional limitations which focus on addressing problems arising in the context of a hybrid derivatives trading system in which trades are made both electronically and on a trading floor (i.e., "in the pits").  These limitations include:

• "delaying automatic execution of the new quote and the order, and starting a timer,"
• while "delaying automatic execution" of the order, and "before expiration of the timer," receiving a second matching quote "wherein the second quote matches the respective price of the public customer order," and
• "allocating the order between the first and second in-crowd market participants at the electronic trade engine, wherein the order is not executed until expiration of the timer."

The PTAB found these additional limitations did, in fact, integrate the recited judicial exception of derivative trading into a practical application.  In particular, these additional elements limit the conventional practice of automatically executing matching market orders by reciting a specific timing mechanism in which the execution of a matching order is delayed for a specific period of time.  The PTAB found that the Specification provided further context to conclude that the use of the claimed timing mechanisms and the associated temporary restraints on execution of trades provided a specific technological improvement over prior derivatives trading systems.

Because the PTAB determined that the claim is not directed to the recited judicial exception, the claim satisfied section 101 at step 1 of Alice.

Dissent

The Dissent disagreed with the conclusion that the additional elements recited in the claims actually integrate the judicial exception of derivative trading into a practical application.

Namely, the Dissent disagreed with the majority that the use of the claimed timing mechanisms and the associated temporary restraints on execution of trades provides a specific improvement over prior derivatives trading systems.  Instead, the Dissent maintained that the delay of matching market orders, whether 10 minutes, 10 seconds, or even 1 millisecond, is a necessary requirement for both the conventional trading practice or Appellants' derivative trading practice of automatically executing matching market orders, whether on a trading floor (i.e., "in the pits") or electronically.  It was suggested that such timing features themselves are not technical in nature and do not provide any "technical solution to a technical problem".

The Majority noted, however, that the claimed timing mechanisms are not so trivial.  In fact, the use of the recited "timer" does not occur with each and every trade.  Rather, it is implemented in specific circumstances in a specific trading environment, namely when a matching market order is received from an in-crowd market participant in a hybrid trading system.  Thus, Appellants' claims were found to overcome a problem specifically arising in the realm of computer networks.

Panel: Administrative Patent Judges Bui, Barry, and Bennett
Decision on Appeal by Administrative Patent Judge Bennett; dissent by Administrative Patent Judge Bui

Natural Alternatives International, Inc. v. Creative Compounds, LLC (Fed. Cir. 2019)

By Donald Zuhn --

Last week, in Natural Alternatives International, Inc. v. Creative Compounds, LLC, the Federal Circuit reversed and remanded a decision by the U.S. District Court for the Southern District of California granting a motion for judgment on the pleadings filed by Creative Compounds, LLC that the asserted claims of U.S. Patent Nos. 5,965,596, 7,825,084, 7,504,376, 8,993,610, 8,470,865, and RE45,947 are not patent eligible.  In reversing the District Court, the Federal Circuit found that Creative Compounds had failed to demonstrate that the asserted claims were not patent eligible in view of Natural Alternatives' proposed claim constructions.

The patents at issue, which are owned by Natural Alternatives International, Inc., relate to dietary supplements containing beta-alanine.  Beta-alanine is an amino acid, which together with the amino acid histidine, can form dipeptides that are found in muscles, which in turn are involved in the regulation of intracellular pH during muscle contraction and development of fatigue.  Variations in dipeptide concentrations affect the anaerobic work capacity of individual athletes.  The asserted claims relate to the use of beta-alanine in a dietary supplement to increase the anaerobic working capacity of muscle and other tissue.

Natural Alternatives has asserted the patents at issue in multiple suits in the Southern District, including against Creative Compounds.  Creative Compounds responded by moving for judgment on the pleadings, which the District Court granted.  The District Court determined that all of the asserted claims were directed to patent ineligible subject matter under 35 U.S.C. § 101 and lacked an inventive concept sufficient to render the claims patent eligible.  Although the District Court indicated that it had accepted Natural Alternatives' proposed claim constructions in performing its eligibility analysis, the Federal Circuit, applying those same proposed claim constructions, determined that "the complaint's factual allegations, together with all reasonable inferences, plausibly establish the eligibility of the representative claims."

The majority opinion, authored by Judge Moore and joined by Judge Wallach, addresses three types of asserted claims:  (1) methods of treatment using beta-alanine ("the Method Claims"), (2) dietary supplements ("the Product Claims"), and (3) uses of beta-alanine in manufacturing a human dietary supplement ("the Manufacturing Claims").  Regarding the Method Claims, the opinion notes that claim 1 of the '596 patent and claim 1 of the '865 patent are representative (emphasis in the opinion):

Claim 1 of the '596 patent recites:

1.  A method of regulating hydronium ion concentrations in a human tissue comprising:
    providing an amount of beta-alanine to blood or blood plasma effective to increase beta-alanylhistidine dipeptide synthesis in the human tissue; and
    exposing the tissue to the blood or blood plasma, whereby the concentration of beta-alanylhistidine is increased in the human tissue.

Claim 1 of the '865 patent recites:

1.  A method of increasing anaerobic working capacity in a human subject, the method comprising:
    a)  providing to the human subject an amount of an amino acid to blood or blood plasma effective to increase beta-alanylhistidine dipeptide synthesis in the tissue, wherein said amino acid is at least one of:
        i)  beta-alanine that is not part of a dipeptide, polypeptide or oligopeptide;
        ii)  an ester of beta-alanine that is not part of a dipeptide, polypeptide or oligopeptide; or
        iii)  an amide of beta-alanine that is not part of a dipeptide, polypeptide or oligopeptide; and
    b)  exposing the tissue to the blood or blood plasma, whereby the concentration of beta-alanylhistidine is increased in the tissue,
    wherein the amino acid is provided through a dietary supplement.

The opinion also notes that Natural Alternatives proposed the following constructions:
• "effective" means to "elevate[] beta-alanine above natural levels to cause an increase in the synthesis of beta-alanyl-histidine dipeptide in the tissue";
• "dietary supplement" means "an addition to the human diet, which is not a natural or conventional food, which effectively increases athletic performance when administered to the human over a period of time"; and
• "increasing anaerobic working capacity" means "increasing the amount of work performed by a muscle under lactate producing conditions".

The District Court determined that claim 1 of the '596 patent and claim 1 of the '865 patent are directed to natural laws, finding that these claims are directed to the natural laws that "ingesting certain levels of beta-alanine, a natural substance, will increase the carnosine [a dipeptide] concentration in human tissue and, thereby, increase the anaerobic working capacity in a human," or "thereby, aid in regulating hydronium ion concentration in the tissue."  The panel majority, however, did not agree with the District Court, explaining that:

Administering certain quantities of beta-alanine to a human subject alters that subject's natural state.  Specifically, homeostasis is overcome, and the subject's body will produce greater levels of creatine.  This, in turn, results in specific physiological benefits for athletes engaged in certain intensive exercise.  The claims not only embody this discovery, they require that an infringer actually administer the dosage form claimed in the manner claimed, altering the athlete's physiology to provide the described benefits.  These are treatment claims and as such they are patent eligible [citations omitted].

In support of its determination that the Method Claims are patent eligible treatment claims, the panel majority cited to the Court's decision in Vanda Pharmaceuticals Inc. v. West-Ward Pharmaceuticals International Ltd., 887 F.3d 1117 (Fed. Cir. 2018), noting that Vanda stands for the proposition that claims directed to particular methods of treatment are patent eligible.  In summarizing the Court's decision in Vanda, the panel majority explains that:

The claims in Vanda involved a method of treating patients with schizophrenia that first required performing a genetic test to determine if a patient was a CYPD2D6 performer.  Based on the results of that test, a particular dose of iloperidone was selected and internally administered.  As a result, the risk of QTc prolongation, a dangerous side effect, was decreased.  We held that the claims were not directed to a natural relationship between iloperidone, CYP2D6 metabolism, and QTc prolongation.  While we acknowledged that the inventors had recognized the underlying relationships, we explained that those were not what was claimed.  Instead, the claims were directed to a patent-eligible method of using iloperidone to treat schizophrenia, "a specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome" [citations omitted].

In distinguishing Vanda from the Supreme Court's decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012), the majority opinion notes that "[u]nlike the claims held ineligible in Mayo, which required only the observation of a natural law, the Vanda claims required a doctor to affirmatively administer a drug to alter a patient's condition from their natural state," adding that the claims in Mayo "did not . . . require any actual action be taken based on the measured level of metabolite," and thus, were not treatment claims.  The opinion also notes that "[t]his was expressly recognized in Mayo, which distinguished the Mayo claim from 'a typical patent on a new drug or a new way of using an existing drug,' because the Mayo claim did not 'confine [its] reach to particular applications' of the natural laws relied upon."  And according to the panel majority, "[t]he fact that the human body responds to the treatment through biochemical processes does not convert the claim into an ineligible one."

With respect to the Method Claims, the opinion notes that these claims "are directed to patent eligible new ways of using an existing product, beta-alanine," and therefore, "fall[] clearly within the scope of § 101, which allows for patents on 'any new and useful process,' including 'a new use of a known . . . composition of matter, or material.'"  Moreover, "[w]hile the Method Claims have similarities to the claims found ineligible in Mayo, as they utilize an underlying natural law, this is not sufficient to establish that they are directed to that law."  According to the panel majority, "[u]nlike the claims in Mayo, the Method Claims at issue are treatment claims," and "[l]ike the claims in Vanda, the Method Claims contain specific elements that clearly establish they are doing more than simply reciting a natural law."  In particular, the opinion notes that the Method Claims specify a patient population to be treated, particular results to be obtained by practicing the method, a compound to be administered to achieve the claimed result, and the dosages of the compound to be administered (via the "effective" limitation in the Method Claims).  Thus, the Method Claims "go[] far beyond merely stating a law of nature, and instead set[] forth a particular method of treatment."  The panel majority therefore concludes that "[t]he Method Claims at issue are treatment claims," which "cover using a natural product in unnatural quantities to alter a patient's natural state, to treat a patient with specific dosages outlined in the patents," and as such, these claims are not directed to ineligible subject matter.

Regarding step two of the Alice/Mayo analytic framework for assessing subject matter eligibility, the panel majority indicates that Creative Compounds' citation to disclosure in the asserted patents in support of its argument that placing a natural substance into a dietary supplement for administration to a human, in order to increase the function of tissues is a conventional, well-known activity, "does not establish that the dietary supplement in the claims, which provides a dose well in excess of the normal levels of beta-alanine, would have been well-understood, routine, and conventional."  (In a footnote, the opinion notes that "the record contains an expert declaration stating that 'one 3.2 gram daily supplement of beta-alanine is the equivalent to eating at least 109 Big Macs per day.'")  The opinion also explains that:

While a fact-finder may ultimately determine that the dietary supplement limitation was well-understood, routine, and conventional, absent a clear statement to that effect in the specification, complaint, or other material properly before the court, when disputed such a determination may not be made on a motion for judgment on the pleadings.

Notwithstanding the panel majority's step two analysis, the opinion concludes that "[u]nder Natural Alternatives' proposed claim constructions, the Method Claims are not directed to an exception to § 101 under the first step of the Alice test," and "[t]herefore, judgment on the pleadings was inappropriate."

Turning to the Product Claims, the opinion notes that the District Court treated claim 6 of the '376 patent (which depends from claims 1 and 5) and claim 1 of the '084 patent as representative of the Product Claims in the asserted patents.  Claims 1, 5, and 6 of the '376 patent recite (emphasis in the opinion):

1.  A composition, comprising:
    glycine; and
    a) an amino acid selected from the group consisting of a beta-alanine, an ester of a beta-alanine, and an amide of a beta-alanine, or
    b) a di-peptide selected from the group consisting of a beta-alanine di-peptide and a beta-alanylhistidine di-peptide.

5.  The composition of claim 1, wherein the composition is a dietary supplement or a sports drink.

6.  The composition of claim 5, wherein the dietary supplement or sports drink is a supplement for humans.

Claim 1 of the '084 patent recites:

1.  A human dietary supplement, comprising a beta-alanine in a unit dosage of between about 0.4 grams to 16 grams, wherein the supplement provides a unit dosage of beta-alanine.

The opinion also notes that Natural Alternatives proposed the following construction:
• "dietary supplement" and "human dietary supplement" mean "an addition to the human diet, which is not a natural or conventional food, which effectively increases athletic performance and is manufactured to be used over a period of time."

The District Court determined that claim 6 of the '376 patent and claim 1 of the '084 patent are directed to ineligible subject matter, finding that these claims are directed to "the natural phenomena of beta-alanine and glycine" and "the natural phenomenon of beta-alanine."  As with the Method Claims, however, the panel majority again did not agree with the District Court, explaining that:

Although beta-alanine is a natural product, the Product Claims are not directed to beta-alanine.  A claim to a manufacture or composition of matter made from a natural product is not directed to the natural product where it has different characteristics and "the potential for significant utility."  See Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980).  Just as the Method Claims are directed to specific methods of treatment that employ a natural law, the Product Claims are directed to specific treatment formulations that incorporate natural products, but they have different characteristics and can be used in a manner that beta-alanine as it appears in nature cannot.

With respect to those "different characteristics," the panel majority notes that "[u]nder Natural Alternatives' claim constructions, the quantity of beta-alanine must be sufficient to 'effectively increase[] athletic performance.'"  The opinion concludes that "[a]t this stage in the litigation, it has been sufficiently alleged that these characteristics provide significant utility, as the claimed dosage forms can be used to increase athletic performance in a way that naturally occurring beta-alanine cannot," and therefore, finds that the Product Claims are not directed to ineligible subject matter.  The opinion also notes that even if the Product Claims were directed to ineligible subject matter, judgment on the pleadings would still have been inappropriate under step two of the Alice/Mayo analytic framework because the Product Claims, like certain Method Claims, contain a dietary supplement limitation, and "the specification does not contain language supporting the idea that this limitation was well-understood, routine, and conventional."

Turning to the Manufacturing Claims, the opinion notes that the District Court treated claim 1 of the '610 patent as representative of the Manufacturing Claims in the asserted patents.  Claim 1 of the '610 patent recites (emphasis in the opinion):

1.  Use of beta-alanine in manufacturing a human dietary supplement for oral consumption;
    supplying the beta-alanine, which is not part of a dipeptide, polypeptide or oligopeptide, as a single ingredient in a manufacturing step of the human dietary supplement or
    mixing the beta-alanine, which is not part of a di-peptide, polypeptide or oligopeptide, in combination with at least one other ingredient for the manufacture of the human dietary supplement,
    whereby the manufactured human dietary supplement is for oral consumption of the human dietary supplement in doses over a period of time increases beta-alanyl histidine levels in muscle tissue sufficient to delay the onset of fatigue in the human.

The opinion also notes that Natural Alternatives proposed the following constructions:
• "[u]se of beta-alanine in manufacturing a human dietary supplement" means "making an addition to the human diet using beta-alanine, which is not a natural or conventional food, to be administered over a period of time and that effectively increases athletic performance."
• "supplying the beta-alanine, which is not part of a dipeptide, polypeptide or oligopeptide, as a single ingredient in a manufacturing step of the human dietary supplement" means "providing the free amino acid beta-alanine, an ester of beta-alanine or an amide of beta-alanine in a step of making an addition to the human diet using beta-alanine as the only active ingredient, which is not a natural or conventional food, which effectively increases athletic performance when administered to a human over a period of time."
• "mixing the beta-alanine, which is not part of a dipeptide, polypeptide or oligopeptide, in combination with at least one other ingredient for the manufacture of the human dietary supplement" means "making an addition to the human diet, which is not a natural or conventional food, and which effectively increases athletic performance when administered to a human over a period of time, using the free amino acid beta-alanine, an ester of beta-alanine or an amide of beta-alanine and at least one other ingredient."

The District Court determined that claim 1 of the '610 patent is directed to ineligible subject matter, finding that this claim is directed to "the natural phenomenon beta alanine and the natural law that ingesting certain levels of beta-alanine will increase the carnosine concentration in human tissue."  As with the Method Claims and Product Claims, however, the panel majority again did not agree with the District Court, explaining that:

The Manufacturing Claims are not directed to the natural law or product of nature, but instead are an application of the law and new use of that product.  Claim 1 of the ’610 patent is even further removed from the natural law and product of nature at issue in the Method Claims and Product Claims, respectively.  It is directed to the manufacture of a human dietary supplement with certain characteristics.  The supplement is not a product of nature and the use of the supplement to achieve a given result is not directed to a law of nature.  We do not see, therefore, how a claim to the manufacture of a non-natural supplement would be directed to the law of nature or natural product.

Finding that the asserted claims are not directed to ineligible subject matter under step one of the Alice test, the Federal Circuit reversed the District Court's decision that these claims are directed to ineligible subject matter and remanded for further proceedings.  The panel majority concludes by noting that "[w]e live in the natural world, and all inventions are constrained by the laws of nature," adding that "[a]s the Supreme Court has warned, we must be careful not to overly abstract claims when performing the Alice analysis."

In an opinion concurring-in-part and dissenting-in-part, Judge Reyna explained that he was dissenting from the majority's "broad stroke of eligibility, primarily because I conclude that the majority's § 101 analysis relies on an erroneous claim construction," but was concurring in the result reached by the majority to remand for further proceedings because he expected that this would permit the District Court to revisit the § 101 question under a proper claim construction.  In the instant case, Judge Reyna believed that "the ordinary meaning 'may be readily apparent even to lay judges, and claim construction in such cases involves little more than the application of the widely accepted meaning of commonly understood words,'" citing Phillips v. AWH Corp., 415 F.3d 1303, 1314 (Fed. Cir. 2005) (en banc).  Moreover, Judge Reyna indciated that he is concerned with the majority's analysis because "it relies on a claim construction that improperly imports limitations into the claims and is contradicted by the written description."

Aside from this concern, Judge Reyna suggested that on remand the District Court "could include a formal claim construction and a potential revisit of the § 101 issue," and therefore inquired as to "whether anything meaningful has been achieved in these circumstances."  He concluded his opinion by declaring that "[t]his case, and the general development of the law concerning § 101 analysis at the pleading stage, causes me to ask whether the time has come for this court to reconsider whether a Rule 12(c) motion based on § 101 should be decided before claim construction."

Natural Alternatives International, Inc. v. Creative Compounds, LLC (Fed. Cir. 2019)
Panel: Circuit Judges Moore, Reyna, and Wallach
Opinion by Circuit Judge Moore; opinion concurring-in-part and dissenting-in-part by Circuit Judge Reyna

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

Claims for Dynamically Rating Internet Content Deemed Patent-Ineligible

By James Korenchan --

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Donald Zuhn --

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

By Kevin E. Noonan --

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

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

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

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

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

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

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

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

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

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

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

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

By Joseph Herndon --

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

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

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

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

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

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

The Alice court set out a two-step framework for determining patent eligibility.  First, a court determines whether the claims at issue are directed a patent-ineligible concept, namely, an abstract idea.  If so, the court considers the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.  Step two of this analysis is described as a search for an "inventive concept"—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.

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

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

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

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

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

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

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

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

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

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