Patent Docs

Recentive Analytics, Inc. v. Fox Corp. (Fed. Cir. 2025)

By Michael Borella --

For the last several years, patentees and patent practitioners have been waiting for the Federal Circuit to weigh in on the patent eligibility of machine learning models.  There was an expectation that, like any other technology, the patentability under 35 U.S.C. § 101 of inventions that incorporate machine learning would need to be evaluated on a case by case basis.  But there was also some hope that the Court would provide the public with at least some hint of what aspects of machine learning might signal eligibility.  In Recentive Analytics, Inc. v. Fox Corp., these signals are weak at best.

Patent eligibility was historically not a major concern until the Supreme Court's judicially-imposed patent eligibility test[1] of Alice Corp. Pty. Ltd. v. CLS Bank Int'l that came down in 2014.  A valid criticism of Alice is that it behaves like the proverbial nose of wax -- the test exhibits a large degree of inherent subjectivity.  Depending on who is applying the test, what case law they are considering, and perhaps the phase of the moon, virtually any claim under review can be viewed as both eligible and ineligible.

To that point, the Alice opinion made it crystal clear that the computer-controlled rubber mold of Diamond v. Diehr was still patent-eligible.  Even though Diehr was not overturned and remains good law, the Alice test as currently applied by the Federal Circuit and USPTO can easily be used to establish a strong position that the claims of Diehr were in fact ineligible.[2]

As a consequence, the last decade has seen patent assets take on the nature of Schrodinger's Cat.  Any issued patent is in a quantum superposition -- both valid and invalid -- until its eligibility is "observed" by a judicial body.  This uncertainty has real-world anti-competitive consequences, making patent acquisition more expensive yet less effective for small businesses while allowing incumbent technology companies to develop into monopolies or cartels of two-three major players who never assert their patents against one another.  Why does the United States -- ostensibly a proud capitalist society that welcomes competition -- have such a weak patent law?  As a stated in the film version of All the President's Men, "Follow the money."

In any event, Recentive sued Fox for infringement of U.S. Patent Nos. 10,911,811, 10,958,957, 11,386,367, and 11,537,960 in the United States District Court for the Eastern District of Pennsylvania.  According to the Federal Circuit:  "The patents purport to solve problems confronting the entertainment industry and television broadcasters: how to optimize the scheduling of live events and how to optimize network maps, which determine the programs or content displayed by a broadcaster's channels within certain geographic markets at particular times."

The Court divided the four Recentive patents into two categories:  machine learning training and network maps.  The former are directed to (in the words of the Court):

(i) a collecting step (receiving event parameters and target features); (ii) an iterative training step for the machine learning model (identifying relationships within the data); (iii) an output step (generating an optimized schedule); and (iv) an updating step (detecting changes to the data inputs and iteratively generating new, further optimized schedules).

The latter are directed to (again in the words of the Court):

(i) a collecting step (receiving current broadcasting schedules); (ii) an analyzing step (creating a network map); (iii) an updating step (incorporating real-time changes to the data inputs); and (iv) a using step (determining program broadcasts using the optimized network map).

Despite the Court's summarization of the claim language at a high level, the actual claims are quite lengthy and narrow.  They are reproduced in the appendices below.

Fox moved to dismiss for failure to state a claim, alleging that the patents were invalid under § 101.  The District Court agreed, finding that the claims were "directed to the abstract ideas of producing network maps and event schedules, respectively, using known generic mathematical techniques" and further lacked an inventive concept "because the machine learning limitations were no more than broad, functionally described, well-known techniques and claimed only generic and conventional computing devices."

On appeal, the Federal Circuit affirmed.  In doing so, the Court relied heavily on admissions from Recentive that its iterative training was a known technique, fundamental to development of a machine learning model.  But the Court when further, dismissing Recentive's argument that the invention comprised a technical improvement by noting that "neither the claims nor the specifications describe how such an improvement was accomplished."  The Court also quickly disposed of Recentive's argument that the claims were eligible because they apply machine learning to specific acts of event planning.  Indeed, the Court illustrated its reductionist, myopic view of patent eligibility by stating "patents may be directed to abstract ideas where they disclose the use of an already available technology, with its already available basic functions, to use as a tool in executing the claimed process."

The Court also found no inventive concept in the claims.  Recentive argued for "using machine learning to dynamically generate optimized maps and schedules based on real-time data and update them based on changing conditions."  Here, the Court provided a rather substance-free and conclusory analysis, stating that:

[T]his is no more than claiming the abstract idea itself.  Such a position plainly fails to identify anything in the claims that would 'transform' the claimed abstract idea into a patent-eligible application . . . .  [W]e perceive nothing in the claims, whether considered individually or in their ordered combination, that would transform the Machine Learning Training and Network Map patents into something significantly more than the abstract idea of generating event schedules and network maps through the application of machine learning.

Accordingly, all four Recentive patents were found to be ineligible under § 101.

This decision, like § 101 jurisprudence as a whole, leaves itself open to criticism on numerous fronts.  Let's discuss just a few.

First, the claim language of the machine learning patents involved updating the models based on a "real-time change to the one or more user-specific event parameters."  Once trained, models are typically used for quite a while before being retrained.  Thus, it could have been argued that this feature is unconventional.  The opinion never specifically addressed the feature, and did not appear to appreciate this nuance.

Second, continuing a disturbing trend, the Court appears to ignore its older holdings (notably, BASCOM Global Internet Services v. AT&T Mobility) finding that computer-implemented inventions can be eligible even when involving only a combination of generic components and claimed at a high level.

Finally, the Court fails to articulate exactly what is required for us to consider claims as an "ordered combination."  Here, as in many § 101 decisions over the years, the Court's reasoning amounts to no more than "Because we said so."

It is a cliché that bad facts make bad law.  In an effort to stave off the worst types of overreach that might follow because of this decision, let's make it clear what the Court did not hold.

• That all machine learning inventions are ineligible (the Court hinted that more detail in the claim and the specification regarding the technical improvement provided may be sufficient to establish eligibility);

• That any claim reciting a machine learning process at a high level is ineligible (such a claim could be eligible based on its other elements);

• That any claim applying a machine learning model to a new field of data is ineligible (the Court leaves open the possibility that the model or its training process can be the technical improvement if explained in enough detail).

Nonetheless, § 101 is still a mess.  This case does nothing to change today's irrational, arbitrary, and mine-ridden patent eligibility landscape.

Appendix A: Claim 1 of the '367 Patent

1.  A computer-implemented method of dynamically generating an event schedule, the method comprising:
    receiving one or more event parameters for series of live events, wherein the one or more event parameters comprise at least one of venue availability, venue locations, proposed ticket prices, performer fees, venue fees, scheduled performances by one or more performers, or any combination thereof;
    receiving one or more event target features associated with the series of live events, wherein the one or more event target features comprise at least one of event attendance, event profit, event revenue, event expenses, or any combination thereof;
    providing the one or more event parameters and the one or more event target features to a machine learning (ML) model, wherein the ML model is at least one of a neural network ML model and a support vector ML model;
    iteratively training the ML model to identify relationships between different event parameters and the one or more event target features using historical data corresponding to one or more previous series of live events, wherein such iterative training improves the accuracy of the ML model;
    receiving, from a user, one or more user-specific event parameters for a future series of live events to be held in a plurality of geographic regions;
    receiving, from the user, one or more user-specific event weights representing one or more prioritized event target features associated with the future series of live events;
    providing the one or more user-specific event parameters and the one or more user-specific event weights to the trained ML model;
    generating, via the trained ML model, a schedule for the future series of live events that is optimized relative to the one or more prioritized event target features;
    detecting a real-time change to the one or more user-specific event parameters;
    providing the real-time change to the trained ML model to improve the accuracy of the trained ML model; and
    updating, via the trained ML model, the schedule for the future series of live events such that the schedule remains optimized relative to the one or more prioritized event target features in view of the real-time change to the one or more user-specific event parameters.

Appendix B: Claim 1 of the '811 Patent

1.  A computer-implemented method for dynamically generating a network map, the method comprising:
    receiving a schedule for a first plurality of live events scheduled to start at a first time and a second plurality of live events scheduled to start at a second time;
    generating, based on the schedule, a network map mapping the first plurality of live events and the second plurality of live events to a plurality of television stations for a plurality of cities,
    wherein each station from the plurality of stations corresponds to a respective city from the plurality of cities,
    wherein the network map identifies for each station (i) a first live event from the first plurality of live events that will be displayed at the first time and (ii) a second live event from the second plurality of live events that will be displayed at the second time, and
    wherein generating the network map comprises using a machine learning technique to optimize an overall television rating across the first plurality of live events and the second plurality of live events;
    automatically updating the network map on demand and in real time based on a change to at least one of (i) the schedule and (ii) underlying criteria,
    wherein updating the network map comprises updating the mapping of the first plurality of live events and the second plurality of live events to the plurality of television stations; and
    using the network map to determine for each station (i) the first live event from the first plurality of live events that will be displayed at the first time and (ii) the second live event from the second plurality of live events that will be displayed at the second time.

[1] For sake of completeness, the test was explained by the justices as "First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts [(i.e., laws of nature, natural phenomena, and abstract ideas)]. If so, we then ask, '[w]hat else is there in the claims before us?' To answer that question, we consider 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. We have described step two of this analysis 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.'"

[2] Michael Borella, Could Alice Be Used to Invalidate Diehr? Of Course It Could, Patent Docs, Apr. 20, 2021.

Recentive Analytics, Inc. v. Fox Corp. (Fed. Cir. 2025)
Panel:  Circuit Judges Dyk and Prost and Chief District Judge Goldberg
Opinion by Circuit Judge Dyk

One of the Early Appeal Decisions in Quantum Computing Represents a Positive Datapoint

By Andrew Velzen --

As reported by Quantum Insider[1], this past week, the Patent Trial and Appeal Board (PTAB) at the United States Patent and Trademark Office (USPTO) overturned an examiner's rejections of an application directed to a quantum computing invention.[2]  Even though this decision is based solely on the view of three administrative patent judges at the PTAB, it is notable since there have not yet been a substantial amount of PTAB or Federal Circuit decisions in the technical area of quantum computers.[3]  Further, as multiple commentators have noted, the current landscape under 35 U.S.C. § 101 could potentially be hostile to quantum computing innovations.[4]  Hence, opinions rendered in this space will likely be an important early barometer regarding the likelihood of success in terms of patentability.  Given this, I feel it is worth gleaning what we can from this early decision. During examination, the Examiner rejected the majority of the pending claims under 35 U.S.C. § 112(a) as lacking written description and all pending claims under 35 U.S.C. § 101 as directed to patent-ineligible subject matter. The 35 U.S.C. § 112(a) rejections warrant little discussion.  Essentially, the Examiner had rejected the "generating an objective function" step of the claims (step (a) from claim 1 above) as only demonstrating that the inventors were in possession of the specific objective function described as an example in the Specification.  According to the Examiner, this was insufficient to meet the written description requirement.  The PTAB roundly disagreed with the Examiner's analysis on this point.  In the panel's view, the Examiner:  conflated the enablement requirement with the written description requirement as it applied to using example species to describe a genus; improperly stated that the Specification fails to indicate how the inventors intended for the features to be performed while simultaneously citing to specific examples from the Specification of how to perform the claim features; and cited to irrelevant caselaw in the rejection. Perhaps most importantly with respect to the § 112(a) rejection, the PTAB noted that "the original claim 1, which is a part of the Specification, recites the disputed limitation."  As such, the PTAB overturned the § 112(a) rejections.

Much more interesting, in my view, is the PTAB's addressing of the Examiner's rejections under 35 U.S.C. § 101.  Under the traditional two-step Mayo/Alice test, the Examiner had previously stated that the preparation and measurement of quantum states is mere "gathering data of a particular type or source to be used in performing the abstract idea" and "is an attempt to limit the abstract idea to a particular field of use or technological environment."[8]  In its own analysis, the PTAB jumped directly to Step 2A, Prong 2 of the Mayo/Alice test (i.e., whether the claimed abstract idea is integrated into a practical application).  In doing so, the PTAB determined that the applicant's claims did integrate the abstract idea (e.g., the mathematical relationships) into a practical application and, therefore, are patent-eligible.

In analyzing the applicant's claims, the PTAB agreed with the applicant's argument that the claims provide a technological improvement by enabling noisy quantum computers (which have limited circuit depth) to practically solve linear systems.  In order to arrive at this determination, the PTAB pointed to discussions from the applicant's specification of limitations in other quantum computing systems:

One problem to which quantum computers have been applied is solving linear systems.  Existing techniques for using quantum computers to solve linear systems, however, cannot be implemented on current quantum computers, which are noisy and have low circuit depths.

...

What is needed, therefore, are improvements to quantum computers for solving linear systems.

...

A hybrid quantum-classical (HQC) computer system, which includes both a classical computer and a quantum computer, solves linear systems.

As a result of the above, the Examiner was reversed on all counts.

There are two points I take away from this decision.  The first point is something that most of us who routinely work in technologies likely to face § 101 rejections are already very well-aware of.  That is, make sure to explicitly recite both an underlying technical problem and how your invention provides a technical improvement when drafting a patent specification.  That way, your first go-to in responding to a § 101 rejection can always be to parrot passages from your own specification to easily argue that your claims provide the requisite technical improvement under Step 2A, Prong Two (or under the "significantly more" analysis of Step 2B) of the Mayo/Alice test.  It is clear that these types of passages and the associated argumentation from applicant's counsel were sufficiently persuasive for the PTAB.

Second, and more crucially / technology-specific in my view, this case is also an example that enabling quantum computers to perform techniques that classical computers already routinely perform can still constitute a technical improvement under § 101.  For example, classical computers can already solve linear systems of equations.  However, here, the goal of the applicant was to enable noisy quantum systems to be used in solving linear systems of equations.  Thus, by framing the application appropriately, even merely enabling some classical computing actions in a quantum computing space can provide the requisite technical improvement.  And why shouldn't it?  Ultimately, like here, by accounting for some of the shortcomings of quantum computers (e.g., noise), the speedup of quantum computers can be actualized, which is, in itself, absolutely an improvement.  While it may seem clear that this should be considered an improvement, it is relieving (especially in an area of the law rife with self-contradictions and head-scratchers) that this first result agrees.

Obviously, though the claims at issue here do involve mathematics at a baseline level, the claims still recite actively manipulating qubits in the all-important "controlling" step that the PTAB highlighted.  It will be intriguing to see, as we go forward, whether claims that are one or more steps further abstracted (e.g., relating more tenuously to hardware and more directly to quantum algorithms) will also be viewed favorably under § 101.  Also, as I noted upfront, this is just one case with three APJs, so we will have to monitor if this decision reflects the general opinion toward quantum innovations going forward or instead marks an aberration.  I remain hopeful that, like the invention in question, judges and examiners evaluating quantum innovations can continue to block out the (§ 101) noise.

[1] https://thequantuminsider.com/2025/02/17/patent-board-overturns-rejection-of-hybrid-quantum-computing-method/

[2] The full text of the PTAB decision can be found here.

[3] And what prior jurisprudence does exist is relatively uninstructive / inapplicable in a general sense.  For example, in the nonprecedential Federal Circuit decision in In re Huping Hu (Fed. Cir. 2021), four patent applications relating to alleged quantum entanglement technologies were rejected primarily under 35 U.S.C. §§ 101 and 112(a) as lacking operability, written description, and enablement.  These final rejections were upheld by the PTAB and then upheld by the Federal Circuit.  In that case, the examiners, the PTAB, and the Federal Circuit were all incredulous based on the applicant's insufficient description of the inventions.  "The PTO, as the nation's guardian of technologic invention, must be receptive to unusual concepts, for the core of invention is unobviousness.  However, concepts that strain scientific principles are properly held to a heightened standard, typically measured by reproducibility of results.  Here the Board was presented with an apparent departure from conventional scientific understanding, and the Board appropriately sustained the examiners' requirements for experimental verification.  The Board applied a reasonable and objective standard, and acted reasonably in sustaining the examiners' requirements.  Should further investigation."  In re Huping Hu (Fed. Cir. 2021).

[4] See, e.g., my 2023 article from Inside Quantum Technology News – https://www.insidequantumtechnology.com/news-archive/how-to-develop-a-strong-quantum-patent-portfolio-part-1/

[5] https://www.hpcwire.com/2024/10/14/zapata-computing-early-quantum-ai-software-specialist-ceases-operations/ 

[6] Published Specification (U.S. Pat. App. Pub. No. 2020/0104740) at Paragraph [0046].

[7] See also Published Specification (U.S. Pat. App. Pub. No. 2020/0104740), Paragraphs [0050]-[0053].

[8] PTAB Decision, Page 12.

Astellas Pharma, Inc. v. Sandoz Inc. (Fed. Cir. 2024)

By Kevin E. Noonan --

One of the anticipated consequences of the Supreme Court's Loper Bright decision is that it will unleash judges to impose their statutory interpretations of administrative agencies' applications of the law within their areas of purported expertise.  Whether that outcome arises, (relatively) recent experience has shown that the "tyranny of the judiciary" can be and has been unleashed in other aspects of U.S. patent law; an example is the recent District Court decision (thankfully overturned by the Federal Circuit, albeit on procedural grounds) in Astellas Pharma, Inc. v. Sandoz Inc.

The case arose in ANDA litigation prompted by Sandoz's application for a generic equivalent of Astellas' Myrbetriq® drug (mirabegron) for treatment of overactive bladder conditions.  The opinion sets forth the mechanistic basis for the efficacy of the drug, which "is a beta-3 agonist that stimulates beta receptors in the bladder, thereby inducing bladder relaxation and improving bladder function."  However, during drug development it was discovered that it had a "food effect," i.e., the bioavailability of the drug was undesirably diminished by the presence of food in a patient's stomach (the drug was absorbed by the food and amounts below the clinically effective levels were absorbed by the patient's body).  Moreover, taking the drug on an "empty stomach" resulted in bioavailable levels that "reach[ed] potentially toxic [blood] concentrations."  Astellas developed sustained release formulations that were patented in U.S. Patent No. 10,842,780; after some litigation interplay, Astellas asserted claims 5, 20, and 25 of the '780 patent which were set forth in the opinion (italicized claims were independent or earlier claims in a dependency chain that are set forth for a clearer understanding of what was claimed):

1.  A pharmaceutical composition, comprising 10 mg to 200 mg of [mirabegron], or a pharmaceutically acceptable salt thereof, in a sustained release hydrogel-forming formulation comprising a hydrogel-forming polymer having an average molecular weight of 100,000 to 8,000,000 and an additive having a water solubility of at least 0.1 g/mL at 20±5° C.,
    wherein the hydrogel-forming polymer is at least one compound selected from the group consisting of polyethylene oxide, hydroxypropyl methylcellulose, hydroxypropyl cellulose, carboxymethyl cellulose sodium, hydroxyethyl cellulose, and a carboxyvinyl polymer,
    wherein the additive is at least one selected from the group consisting of polyethylene glycol, polyvinylpyrrolidone, D-mannitol, D-sorbitol, xylitol, lactose, sucrose, anhydrous maltose, D-fructose, dextran, glucose, polyoxyethylene hydrogenated castor oil, polyoxyethylene polyoxypropylene glycol, polyoxyethylene sorbitan higher fatty acid ester, sodium chloride, magnesium chloride, citric acid, tartaric acid, glycine, β-alanine, lysine hydrochloride, and meglumine, and
    wherein a drug dissolution rate from the pharmaceutical composition is 39% or less after 1.5 hours, and at least 75% after 7 hours, as measured in accordance with United States Pharmacopoeia in 900 mL of a USP buffer having a pH of 6.8 at a paddle rotation speed of 200 rpm.

5.  The pharmaceutical composition according to claim 1, wherein the hydrogel-forming polymer is at least one compound selected from the group consisting of polyethylene oxide, hyd[r]oxypropyl methylcellulose, and hydroxypropyl cellulose.

20.  A method for treating overactive bladder comprising administering the tablet according to claim 18 to a subject in need thereof.

22.  A pharmaceutical composition, comprising 10 mg to 200 mg of [mirabegron], or a pharmaceutically acceptable salt thereof, in a sustained release hydrogel-forming formulation comprising a means for forming a hydrogel and a means for ensuring penetration of water into the pharmaceutical composition, wherein a drug dissolution rate from the pharmaceutical composition is 39% or less after 1.5 hours, and at least 75% after 7 hours, as measured in accordance with United States Pharmacopoeia in 900 mL of a USP buffer having a pH of 6.8 at a paddle rotation speed of 200 rpm.

23.  The pharmaceutical composition according to claim 22, comprising 10mg to 200 mg of [mirabegron].

25.  A tablet, comprising the pharmaceutical composition according to claim 23.

During pretrial proceedings, Sandoz limited its defenses to 35 U.S.C. § 112 (for each of written description, enablement, and indefiniteness).  A five-day bench trial and filing of post-trial motions by the parties followed.

The District Court issued its final decision based on none of the parties' contentions.  Instead, "sua sponte," the District Court held that the claims were ineligible for patenting under § 101 under Mayo Collaborative Servs. v. Prometheus Lab'ys, Inc., 566 U.S. 66 (2012).  Support for this decision came from arguments and assertions in Astellas' post-trial briefing, specifically (in arguing enablement) that "[the] "inventive concept of the '780 Patent was discovering the dissolution rate that would address the food effect and achieving it using previously known formulation technology," which the District Court took to mean that "Astellas concedes that the '780 patent is enabled because it claims invalid subject matter: a natural law applied via routine, conventional, and well-known methods."  (A reminder that the aphorism that "everything you say can be used against you" is not limited to criminal law or police procedurals.)  In the District Court's view, "the claimed invention 'reflects merely the discovery of the food-effect-resolving dissolution profile," the District Court deemed the asserted claims invalid as patent ineligible'" and entered judgment for Sandoz.  The District Court denied Sandoz's motion under Federal Rule of Civil Procedure 52(b) to make findings of fact and conclusions of law to preserve the issues that were presented at trial.  The District Court's basis for denying the motion was that "[t]he [c]ourt could not have better invoked [Mayo]."  This appeal followed.

The Federal Circuit vacated and remanded, in a decision by Judge Lourie joined by Judges Prost and Reyna.  The Court did not reach the merits (expressly; vide infra) but held that the District Court had abused its discretion based on the principle of party presentation, i.e., that courts "rely on the parties to frame the issues for decision and assign to courts the role of neutral arbiter of matters the parties present," citing Greenlaw v. United States, 554 U.S. 237, 243 (2008) (the District Court helped the panel reach this decision by stating in its ruling that it "sits not [as] an arbiter to resolve the disputes on the parties' favored terrain").  Support for the Court's finding can be found, according to the opinion, by copious precedent, including United States v. Sineneng-Smith, 590 U.S. 371, 375 (2020); United States v. Dowdell, 70 F.4th 134, 146 (3d Cir. 2023) (the opinion noting that "[w]e review procedural issues not unique to patent law under regional circuit law"); and Innogenetics, N.V. v. Abbott Lab'ys, 512 F.3d 1363, 1371 (Fed. Cir. 2008) (the opinion also noting that while not "ironclad" "rendering a patent invalid on a basis not advanced by any party is not . . . a circumstance [that would justify straying from the party presentation principle]").

The opinion also invokes the presumption of validity codified under 35 U.S.C. § 282, which imposes on the party asserting invalidity the burden of establishing it by clear and convincing evidence, citing Microsoft Corp. v. I4I Ltd. P'ship, 564 U.S. 91, 95 (2011), and the impropriety for a court to declare a patent "valid," citing Panduit Corp. v. Dennison Mfg. Co., 810 F.2d 1561, 1569 (Fed. Cir. 1987); Shelcore, Inc. v. Durham Indus., Inc., 745 F.2d 621, 627 (Fed. Cir. 1984); and Env't Designs, Ltd. v. Union Oil Co. of Cal., 713 F.2d 693, 699 n.9 (Fed. Cir. 1984) (and continuing the analogy herein, akin to a criminal defendant being found not guilty rather than innocent).  The court's role is only "to determine whether the patent's challenger carried the burden of establishing invalidity," citing Lindemann Maschinenfabrik GMBH v. Am. Hoist & Derrick Co., 730 F.2d 1452, 1457 n.1 (Fed. Cir. 1984).  (It should not pass notice that much of this precedent stems from the time when a newly minted Federal Circuit began to flex its judicial muscles in setting forth consistent applications of the law over the district courts, which had been governed by the regional circuit courts of appeal with varying "takes" on how patent law should be applied.)

Under the Federal Circuit's view of the law "the district court appears to have misapprehended its role in adjudicating the issue of patentability" according to the opinion.  Synthesizing Astellas' arguments concerning enablement under § 112 to arrive at a concession of ineligibility under § 101 was an abuse of discretion in view of these legal principles.  The panel also rejected the District Court's rationale for its decision on an issue never raised by the parties, that "it sensed 'in the [parties'] assertion that patent litigants may, in essence, consent around the bounds of patent eligibility.'"  According to the panel, "[i]t is for the parties—not the court—to chart the course of the litigation," citing Lannom Mfg. Co. v. U.S. Int'l Trade Comm'n, 799 F.2d 1572, 1579 (Fed. Cir. 1986), being directly on point, finding in that case the rubric that "[i]t is beyond cavil that a district court does not have authority to invalidate a patent at its own initiative if validity is not challenged by a party."  Another basis for criticism of the District Court was that court's belief that patent eligibility was "a threshold inquiry that it had a duty to address—even in the silence of the parties" (although to be fair it can be understood why over a decade of Federal Circuit precedent affirming motions to dismiss on § 101 grounds could have left that impression; see examples in earlier posts too numerous to set forth here).  According to the opinion, the presumption of validity under § 282 applies to "all grounds of validity" (emphasis in opinion), citing Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1319 (Fed. Cir. 2019).

For its part, Sandoz supported the District Court's decision, but was limited to citing "cases from the late 1800s and certain non-binding out-of-circuit cases," which were not persuasive (but do provide an interesting history lesson regarding the Supreme Court's and certain Circuit Courts of Appeal's varying historical antipathy to patents).  Moreover, the timing of these decisions, prior to enactment of the presumption of validity in the 1952 Patent Act provides the panel with sufficient justification to ignore whatever precedential force these decisions may retain.

Astellas was less successful in having the Federal Circuit remand this matter to a different district court judge.  In addition to the abuse of discretion against them, the District Court made several statements (presumably on the record) that tended to evince a prejudice against patents to pharmaceuticals and the companies that asserted them.  These statements included that "[t]he pharmaceutical industry, to put it mildly, has perverted th[e] intent [of the Hatch-Waxman Amendments].  With alarming regularity since, brand and generic drug manufacturers have colluded to protect weak or invalid patents and share in the startling profits"; and that "this 'case is about the pharmaceutical industry's long-standing 'innovation' of patenting extended-release formulas for soon-to-expire active-ingredient patents."  Astellas asserted that the District Court's sua sponte entry of judgment against them on § 101 grounds was by itself enough to justify removal.  The Federal Circuit did not agree, first because the panel considered mandating reassignment on remand to be "an exceptional remedy, one that we weigh seriously and order sparingly," citing United States v. Kennedy, 682 F.3d 244, 258 (3d Cir. 2012), and Lazare Kaplan Int'l, Inc. v. Photoscribe Techs., Inc., 714 F.3d 1289, 1298 (Fed. Cir. 2013).  The Court expressly relied upon the Third Circuit standard for reassignment set forth in Arrowpoint Cap. Corp. v. Arrowpoint Asset Mgmt., LLC, 793 F.3d 313, 329 (3d Cir. 2015), requiring that "a reasonable person, with knowledge of all the facts, would conclude that the judge's impartiality might reasonably be questioned."  Astellas did not meet this standard, according to the opinion.*  But the District Court judge's record (having "overseen nearly two hundred patent cases and has ruled in favor of both innovative and generic manufacturers alike") and that Astellas could not provide any instance in which the District Court judge had "acted in a way that called into question his ability to . . . resolve the outstanding issues impartially and fairly" over the "life of this nearly four-year-old litigation" was enough to dissuade the Federal Circuit from mandating removal on remand.  In view of the Court' believing it had "clarified the proper course for adjudication," the opinion closes with the statement that "we trust that, upon remand, the district court can and will take an objective, measured, and thorough look into the legal issues and evidence of record to resolve only those disputes that exist between the parties."

• In stating the Court's reasons for making this determination, the opinion provides, for the rest of us, the hopeful opinion that "we have serious doubts that, on the merits, the asserted claims—directed to nonnatural compositions of matter and associated methods of use—are ineligible for patent protection," albeit this being "an issue [the Court] decline[d] to resolve."

Astellas Pharma, Inc. v. Sandoz Inc. (Fed. Cir. 2024)
Panel: Circuit Judges Lourie, Prost, and Reyna
Opinion by Circuit Judge Lourie

91%: That is the Rate at Which the PTAB Affirms Examiner Section 101 Rejections

By Michael Borella, Mackenna Dunn*, and Garrett "Jake" Lee** --

Over the last two years, we have studied the examiner affirmance rates of the Patent Trial and Appeal Board (PTAB) for § 101 rejections.  The PTAB is the administrative court of the U.S. Patent and Trademark Office (USPTO) that handles applicant appeals of examiner rejections, as well as inter partes reviews (IPRs) and post-grant reviews (PGRs).  Our analyses of 2021 and 2022 data were less than good news for applicants, with the PTAB affirming examiner § 101 rejections 87.1% and 88.4% of the time, respectively.

Given that the PTAB's overall affirmance rate is about 58%,[1] the extreme difficulty of winning a § 101 dispute at the PTAB is shocking.  While some might contend that this is a natural process through which the PTAB weeds out weak inventions, it is actually because § 101 jurisprudence has evolved into a hot mess.  The Supreme Court's decision in Alice Corp. v. CLS Bank Int'l set forth a notoriously vague test, the Federal Circuit followed this with conflicting case law, and the PTAB does not even follow the USPTO's own 101 examination guidance.  This has opened the door to arbitrary and conclusory reasoning often winning the day.

As a result, there have been a number of absurd outcomes, such as the ITC finding a diamond-encrusted drill bit to be an abstract idea and the Federal Circuit coming to the same conclusion about a camera phone.  Furthermore, prosecution of software applications before the USPTO has become highly examiner-dependent rather than being based primarily on the actual claim language at issue.  In other words, we are living in a timeline in which something went terribly wrong over the last two decades.

In any event, the examiner affirmance rates for 2023 provide little hope for applicants.  As noted in the title, it is 91% -- an increase from its already high numbers in 2021 and 2022.

To gather the underlying data, we adopted an approach that was virtually identical to that of last year. From the PTAB's search interface, we specified the following criteria:  decision dates between January 1, 2023 and December 31, 2023, a proceeding type of "appeal", a decision type of "decision", and an issue type of "101".  These search results were filtered to focus only on decisions in which the applicant appealed an examiner's Alice-based § 101 rejection and the PTAB ruled on this basis of appeal.[2]  In other words, we excluded cases in which: (i) the appeal was not of a § 101 issue but the PTAB set forth a new grounds of rejection based on § 101, and (ii) the appeal was of a § 101 issue but the PTAB did not decide the case on § 101 grounds (e.g., the examiner withdrew the § 101 rejections after the appeal was filed).

This took the 633 decisions returned by the search engine down to 495 substantive § 101 decisions.[3]  Compared to 2022, the 2023 overall numbers are quite similar.  There were 634 decisions and 482 substantive § 101 decisions in 2022.

Figure 1

Figure 1 shows these overall results broken down by technical center (TC) from which the appeals originated.[4]  While the affirmance rate per TC is all over the map, the outliers are TCs 3600 and 3700 which are both over 95%.  This should surprise no one as so-called "business method" inventions are routed to these TCs.  When considered together, the vast majority (over 76%) of all appeals are out of TCs 3600 and 3700, demonstrating how frequently examiners in those TCs issue § 101 rejections.

The affirmance rate for TC2100 (computing technologies) has ticked up from last year, jumping to over 85% from 80%.  This demonstrates that current § 101 practice is having a deleterious impact on software patenting in general and not just software-implemented business methods.  Also, the number of appeals out of TC2100 has increased from 45 to 70, suggesting that examiners in this TC have been issuing more § 101 rejections starting in late 2021.  The affirmance rate for TC1600 is also fairly high, likely due to a number of notoriously tough examiners in the bioinformatics art units.

There are too few data points in any of the other TCs to draw any conclusions.  But these results do suggest that a software invention is likely to receive a more favorable examination in TC2100 than TCs 3600 or 3700, and that TCs 2400 and 2600 may be the most favorable TCs for software examination.

Figure 2

Next we considered the type of abstract idea used in the examiners' § 101 rejections.  For the abstract idea exception to patentable subject matter, the three main categories are mathematics, mental processes, and methods of organizing human activity.  In other words, a claim is deemed ineligible for patenting if it is directed to mathematics, a mental process, or a method of organizing human activity without significantly more.  Unfortunately, these categories are ill-defined.

As shown in Figure 2, of all substantive affirmances of § 101 rejections by the PTAB, 17% were based on mathematics, 48% on mental processes, and 68% on methods of organizing human activity.  The reason that these three numbers do not sum to 100% is because some examiners and PTAB panels concluded that claims were directed to more than one of the categories (some were placed in all three).  Not surprisingly, mental steps was the most prevalent category for TC2100 (likely due to the fact that this category has been interpreted to be broadly applicable to software inventions by the Federal Circuit).  Likewise, the high rate of organizing human activity categorizations in TC3600 was expected due to most business methods being conducive to placement therein.

Finally, we looked into situations where the PTAB provided new grounds of rejection based on § 101 (as noted above, most of these decisions were omitted from the analysis leading to Figures 1 and 2).  This is a troublesome thought for many applicants considering whether to appeal a § 102 or 103 rejection.  The PTAB is permitted to reverse the examiner on those grounds but set forth a new § 101 rejection, even if the examiner found the claims eligible under § 101 and the issue was not a subject of the appeal.

Figure 3

The results are shown in Figure 3.  The overall likelihood of receiving a new ground of rejection under § 101 is only 10%.  But it is slightly higher for TC2100 and slightly lower for TC3600.  This is probably because examiners in TC2100 tend to give fewer § 101 rejections while examiners in TC3600 already give § 101 rejections very frequently.  While the numbers for TCs 2400 and 2600 may be too small to be significant, they appear to confirm the supposition that examiners in those TCs give relatively fewer § 101 rejections.

Notably, most of these new grounds of rejection were given for applications where the examiner did not provide a § 101 rejection that was ultimately the subject of the appeal.  The results indicate that the concern of receiving a new § 101 rejection from the PTAB in this situation is not unfounded, though it does not happen frequently.

Summing all of this up, the 2023 data is further confirmation that appealing a § 101 rejection to the PTAB is a highly risky endeavor and likely to result in an affirmance.  Further, appealing any non-101 rejection to the PTAB could result in the PTAB issuing its own § 101 rejection. Thus, continuing to work with an examiner to find allowable subject matter is the recommended course of action, even if the examiner is difficult.  Of course, some examiners -- such as those with very low allowance rates -- are unlikely to consider any amendment to be allowable, and therefore an appeal may be justified.  Moreover, the 2023 data also confirms that the use of TC steering tools should be part of every practitioner's workflow.  These tools use analytics to predict the TC to which a patent application is likely to be routed, and with them it is easier to prepare applications that are more likely to avoid applicant-hostile TCs 3600 and 3700.

* Mackenna Dunn is a summer clerk with MBHB who is attending Chicago-Kent College of Law. Mackenna graduated from the University of Rhode Island with a Bachelor of Science degree in Biomedical/Medical Engineering.

** Garrett "Jake" Lee is a summer clerk with MBHB who is attending George Washington University.  Jake graduated from George Mason University with a Masters in Applied and Engineering Physics.

[1] From the USPTO's appeal statistics for its fiscal year 2023.  This number jumps to around 67% if affirmances-in-part are considered.

[2] To simplify the analysis, we considered a decision to be an "affirmance" of the examiner's § 101 rejection if the PTAB held at least one claim invalid under § 101.

[3] Many of the 633 decisions were of rejections on other grounds (e.g., §§ 102 or 103).  We did not consider anything but the § 101 determinations.  But we omitted decisions with § 101 rejections based on laws of nature or natural phenomena, non-statutory double patenting, utility, and claims that did not fall into one of the four statutory categories (which accounted for only a handful of the decisions).

[4] RD00 is a new, experimental TC that supposedly is an attempt to make examination more efficient and consistent.

Beteiro, LLC v. DraftKings, Inc. (Fed. Cir. 2024)

Federal Circuit Calls "No Bet" on Beteiro's Asserted Patents

By Andrew Velzen --

Recently, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion in Beteiro, LLC v. DraftKings Inc.[1]  This case is yet another case where the Federal Circuit upheld invalidity under § 101.  Here, the patents in question were directed to monitoring gaming / gambling activities at various physical locations, primarily with the idea that a user can be located in one location, but place wagers at a computer in a different location.

In my view, the opinion illustrates what is, at best, a strained § 101 analysis.  The court simply could not get past what it viewed as a substantial imbalance of non-technical content to technical content in the specification.  Notwithstanding, though, there are certainly ways in which Beteiro could have better structured their claims and specification to withstand § 101 scrutiny.  Herein, I'll briefly discuss both of these points.

Case Summary

As a preliminary point, I think it's prudent to at least briefly summarize the procedural posture of the case and the Federal Circuit's decision.  The appeal to the CAFC arose based on multiple lawsuits filed by Beteiro against various gaming entities (DraftKings, PointsBet, BetMGM, Betfair, etc.) in the District of New Jersey.  In those lawsuits, Beteiro asserted patent infringement of four different patents.  Worth noting, despite claiming priority back to applications from 2002, 2003, and 2008, each of the asserted patents was filed in 2016 or later (i.e., each of the asserted patents was prepared and filed after the U.S. Supreme Court's decision in Alice Corp. v. CLS Bank International).  Notwithstanding, each of the defendants (now appellees) filed a motion to dismiss alleging that the asserted patents were invalid under § 101.  The District Court agreed and Beteiro appealed to the CAFC thereafter.

Claim 2 of U.S. Patent No. 10,255,755 was deemed by the parties, the District Court, and the CAFC as representative of all the asserted claims for purposes of § 101 analysis.  This claim recites:

2.  A computer-implemented method, comprising:
    detecting, with or using a computer which is specially programmed for processing information for providing for a placement of a bet on or regarding a gaming activity, a gambling activity, or a sporting event, a posting of information regarding the gaming activity, the gambling activity, or the sporting event;
    generating, with or using the computer, a notification message regarding the gaming activity, the gambling activity, or the sporting event;
    initiating, with or using the computer, a communication link with a first communication device and transmitting the notification message to the first communication device as an electronic transmission, or transmitting, from the computer, the notification message as an electronic mail message, wherein the electronic mail message is received by or received at a first communication device, wherein the first communication device is associated with an individual;
    receiving, with the computer, a bet message transmitted from the first communication device or from a second communication device, wherein the second communication device is associated with the individual, and further wherein the first communication device or the second communication device comprises a global positioning device, wherein the global positioning device determines a position or location of the first communication device or the second communication device, and further wherein the bet message contains information regarding a bet to be placed on or regarding the gaming activity, the gambling activity, or the sporting event, and information regarding the position or location of the first communication device or the second communication device; and
    determining, with or using the computer, whether the bet is allowed or disallowed using the information regarding the position or location of the first communication device or the second communication device and, if the bet is allowed, processing information for placing the bet for or on behalf of the individual, or, if the bet is disallowed, processing information for disallowing the bet [emphases added].

The above-emphasized portions are where the CAFC focused the bulk of its analysis under § 101.  After said analysis, the CAFC ultimately affirmed the determination of invalidity.

Court's § 101 Analysis

As is rote at this point, in order to analyze whether a claimed invention is directed to patent-eligible subject matter, the Federal Circuit applied the Alice/Mayo test (i.e., Step 1 -- Is the claim directed to a process, machine, manufacture, or composition of matter; Step 2A -- Is the claim directed to a judicial exception to eligibility, such as an abstract idea; and Step 2B -- Does the claim amount to significantly more than the judicial exception to eligibility).[2]  It bears noting that the patent examiner who examined these patent applications explicitly evaluated eligibility for the claims under § 101 and found them patent-eligible based on their recitation of a particular machine or processor.

Step 2A

Under Step 2A of the Alice/Mayo test, the CAFC agreed with the District Court that the claims were directed to the abstract idea of "exchanging information concerning a bet and allowing or disallowing the bet based on where the user is located."  In doing so, the CAFC indicated that the claims include many alleged "well-settled indicators of abstractness."  Setting aside the fact that that phrase borders on word salad, these so-called "indicators" included: (1) the claims broadly reciting generic steps of detecting information, generating and transmitting a notification based on the information, receiving a message, determining, and processing information; (2) the claims being drafted using largely result-focused functional language, while containing no specificity about how the purported invention achieves the results; (3) the claims being analogous to claims held abstract in other CAFC cases; and (4) the claims being analogous to longstanding "real-world" activities.

Regarding item (1) above -- Like many claims, if you abstract away all the substance and merely recite some gerunds, claims can quickly devolve into sounding rather patent-ineligible.  Regarding item (2) above -- Whether something is described overly functionally is rather subjective.  Beteiro's claims recite "a computer," "a first communication device," "a second communication device," and "a global positioning device" and also describe communications among those devices.  Obviously, more detail can always be provided in a claim, but not without the cost of narrowing the claim.  Beteiro did not want to limit their claims to any particular type of communication protocol or type of communication devices, nor did Beteiro want to provide any additional unnecessary details about the "computer" or "communication devices."  Further, clearly Beteiro did not need to incorporate such narrowing details (at least in the patent examiner's opinion) in order to demonstrate that the claims were new and non-obvious.  Hence, the CAFC demanding that additional technical details be added to the claims for § 101 purposes when Beteiro already recited multiple devices performing different acts seems dubious.

The CAFC's claim in item (3) is questionable, at best.  The Federal Circuit referenced Affinity Labs of Tex., LLC v. DIRECTV, LLC and Intell. Ventures I LLC v. Capital One Bank (USA) as allegedly containing analogous claims to Beteiro's.  The claims at issue in those cases, however, do not refer to any sort of "global positioning device" and are certainly much less tailored to communication protocols between devices.[3]  For example, the claim considered in Affinity Labs was:

1.  A broadcast system, comprising:
    a network based resource maintaining information associated with a network available representation of a regional broadcasting channel that can be selected by a user of a wireless cellular telephone device; and
    a non-transitory storage medium including an application configured for execution by the wireless cellular telephone device that when executed, enables the wireless cellular telephone device:
        to present a graphical user interface comprising at least a partial listing of available media sources on a display associated with the wireless cellular telephone device, wherein the listing includes a selectable item that enables user selection of the regional broadcasting channel;
        to transmit a request for the regional broadcasting channel from the wireless cellular telephone device; and
        to receive a streaming media signal in the wireless cellular telephone device corresponding to the regional broadcasting channel, wherein the wireless cellular telephone device is outside of a broadcast region of the regional broadcasting channel, wherein the wireless cellular telephone device is configured to receive the application via an over the air download.

Likewise, the claim considered in Intell. Ventures recites:

1.  A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:
    an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:
    a display depicting portions of the web site visited by the user as a function of the web site navigation data; and
    a display depicting portions of the web site visited by the user as a function of the user's personal characteristics.

These claims are only analogous to Beteiro's claims at a relatively high level of abstraction.  For example, neither relate to gambling / gaming in any sense.  Further, the primary purpose of both claims above is to determine what is displayed to a user, whereas the primary purpose of Beteiro's claims is to determine whether to allow or disallow a bet.

Regarding claim (4) -- Analogizing claim language to "real-world" activities, while sometimes done in § 101 cases, has always struck me as a bit ironic.  Namely, if claims are more akin to physical "real-world" activities, those claims are somehow less patent-eligible.  The "real-world" is the exact opposite of "abstract."  Thus, this flavor of analysis is essentially equivalent to saying "the claimed invention is not abstract, therefore it is an abstract idea and patent-ineligible."  It simply strains credulity.

To illustrate the "real-world" nature of Beteiro's claims, the CAFC points to an analogy posited by the District Court of a teller at a casino that straddles state lines.  This analogy is absurd.  As an initial point, I'm not aware of any real casinos that actually fit this description (i.e., where you can place bets in two different states within the same casion).  In fact, I'd assume casinos intentionally avoid this issue so they don't have to simultaneously deal with multiple sets of state laws.  Hence, this issue rarely, if ever, comes up in the context of placing physical bets at a teller.  Oppositely, with modern technology, the issue of confirming location comes up in >90% of all sports bets placed.[4]  Further, even if the scenario proposed by the District Court / CAFC did come up in reality, there would be no "global positioning device" or "communication device(s)" needed or used because the bettor and the teller would be in the same physical location.  Hence, any attempted patent claim to this fabricated "real-world" scenario would look totally different than Beteiro's claims.

On behalf of eligibility, Beteiro argued that their claims involved technological improvements and, therefore, are not directed to abstract ideas.  According to the CAFC, though, because the claims do not provide an improvement to the way computers operate nor do they solve a technical problem, the claims remain abstract ideas.

Step 2B

Under Step 2B of the Alice/Mayo test, Beteiro argued that the inclusion of a global positioning system (GPS) device in their claims was unconventional, which should provide for a path to patentability.  The CAFC attempted to refute this point by referring to the relatively limited discussion of GPS in the specification.  In particular, the lengthy specifications of the asserted patents only includes a single sentence concerning a mobile phone with an equipped GPS device.  Given this, the CAFC concluded that the inclusion of the GPS device on a mobile phone must have been conventional at the time.  This is, at the very least, a dramatic departure from the CAFC's Berkheimer decision.[5]  Regardless, in the CAFC's view, because the inclusion of a GPS on a mobile phone was routine, conventional, and well-understood, the inclusion of the GPS cannot convert a claim that is otherwise patent-ineligible into patent-eligible.

This also raises an interesting procedural point.  Because this appeal arises from a motion to dismiss, any factual disputes need to be resolved in Beteiro's favor.  Further, Beteiro contended in its complaint that the use of GPS for gaming was unconventional in 2002 (their earliest priority date), and provided evidence to support this.  In 2002, for example, the iPhone had yet to be created.  Even so, the CAFC disregarded this contention based solely on what was (and was not) in the specification.  In doing so, the court cited to the recent AI Visualize case:[6]

Conclusory allegations, or those "wholly divorced" from the claims or the specification, cannot defeat a motion to dismiss. And a patentee that emphasizes a claim's use of certain technology, for example, a general-purpose computer, fails at step two when the intrinsic record establishes that the technology is conventional or well-known in the art.

While the Beteiro patents may not have described how one incorporates GPS devices into mobile phones, in detail, I think the court's reliance on the above precedent borders on dubious.  Beteiro's claims did specifically recite a "communication device" that "comprises a global positioning device, wherein the global positioning device determines a position or location of the first communication device or the second communication device."  Hence, Beteiro's allegations were not "'wholly divorced' from the claims."  Still, the court drew a distinction between Beteiro's complaint and the complaint in Cellspin Soft, Inc. v. Fitbit, Inc. where the contentions were purportedly much more rooted in the patent-in-suit.[7]

Lastly, it is perhaps worth mentioning that the CAFC rightly wholly disregarded the patent examiner's previous consideration of § 101 issues under well-established law.  Regardless, though, the patent examiner apparently applied pre-Alice caselaw and relied on the existence of one or more physical components in deciding that the claims were patent-eligible.  This was clearly an overbroad view by the patent examiner.

Suggested Improvements to Bolster Claims Under § 101

The above clearly highlights, yet again, just how sticky § 101 is for patentees, even when physical devices (e.g., mobile devices and/or GPS sensors) are involved.  Perhaps, though, there are some ways that Beteiro could have reframed their specification or claims that would have provided a stronger bulwark for a § 101 analysis.  In that vein, let's highlight a few of them.

One step that Beteiro could have taken, and which is explicitly contemplated by the CAFC opinion, would be to bolster the description of the GPS device in the specification.  Had the specification dedicated more space to technical details about the inclusion of the GPS device in a mobile device, the court clearly thinks that would help patentability (e.g., by demonstrating how the GPS device is a technical improvement) or, at the very least, would have provided fodder to get over a motion to dismiss under § 101 (i.e., because the additional technical details could raise a genuine question of material fact over whether inclusion of a GPS in a mobile device was truly well-understood, routine, and conventional).

There are likely other technical details besides how a GPS device is integrated into a mobile device that could have been included in the specification to show that the use of a GPS device in the claimed way was unconventional.  For example, additional details on the ways in which the mobile device communicates the measured GPS data to the gaming facility computer (e.g., message communication protocols, formats in which the GPS data is communicated, where the GPS data is stored, how the GPS data is accessed / used by the gaming facility computer, etc.) could have been included.  Such additional details would not only serve to demonstrate the level to which the inventors had considered the importance of communicating the GPS data, but would also show why the inclusion of GPS data is central to the claimed invention serving its intended purpose.  Any of these technical details about the GPS could have been explicitly recited in the claims, as well, if Beteiro wanted to further strengthen their § 101 position.

Additionally, as is sage advice these days in almost any patent application that might need to pass muster under § 101, the specification could have laid out a technical problem to be solved and how the claims provide a technical solution.  The claims and specification clearly address what is, in the eyes of the CAFC, non-technical problems (e.g., gambling jurisdiction and legal compliance).  This is simply not helpful based on current § 101 jurisprudence.  Instead, if the specification had couched the discussion in terms of the gaming facility computer being unable to reliably determine the location of the mobile device based on conventional messaging between the two, and then later provided the GPS device as a means of enabling a reliable determination of location in the invention, the court may have been more inclined to find that the claims amounted to "significantly more" (based on the claims providing an arguably technical solution to a technical problem).  While this borders on quibbling about semantic differences, unfortunately, that is the present state of the law under § 101.

In addition to the changes to the specification described above, there are certainly some modifications that could have been made to the claims (many without requiring modification to the specification at all).  One that I would suggest, and this is purely psychological, is to remove references to "gaming activity," "gambling activity," "sporting event," etc. from the claims.  While these terms shouldn't impact a court's view or an examiner's view eligibility under § 101, they implicitly connote non-technical concepts to some readers.  Thus, anecdotally, their inclusion makes patent-eligibility a bit more of an uphill battle.  Hence, broadening the claims to only refer to things like "requests" and "confirmations" rather than "bets" could only help (at least in terms of § 101).

Conclusion

Ensuring compliance with jurisdictional regulations is of paramount importance to the gambling industry.  Further, Beteiro's claimed invention was, at least in the eyes of the patent examiner, a novel and non-obvious way of doing so using a GPS device. While it may seem pedestrian to use a GPS device for such purposes by modern standards, in 2002, it was likely anything but. Still, the morass that is post-Alice § 101 has claimed yet another victim.  If you're hoping to see more clarity in § 101 law soon, I wouldn't bet on it (pun intended).

Beteiro, LLC v. DraftKings, Inc. (Fed. Cir. 2024)
Panel: Circuit Judges Dyk, Prost, and Stark
Opinion by Circuit Judge Stark

[1] https://cafc.uscourts.gov/opinions-orders/22-2275.OPINION.6-21-2024_2337276.pdf

[2] Note that the CAFC opinion basically glosses over Step 1 of the Alice/Mayo test.  Hence, what I am calling "Step 2A" is referred to as "Step 1" by the Federal Circuit and what I am calling “Step 2B” is referred to as "Step 2" by the Court. The nomenclature does not matter so much, but I prefer to go with the more traditional naming that contemplates the full eligibility analysis.

[3] Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253 (Fed. Cir. 2016); Intell. Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363 (Fed. Cir. 2015)

[4] https://www.gamingtoday.com/revenue/ (On July 14, 2024 – "In most markets, more than 90% of sports betting is online.  For markets where mobile wagering is heavily favored, like New York and New Jersey, more than 90% of betting happens online")

[5] Berkheimer v. HP Inc., 890 F.3d 1369 (Fed. Cir. 2018) ("Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.  Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art.  The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional.")

[6] AI Visualize, Inc. v. Nuance Commc’ns, Inc., 97 F.4th 1371 (Fed. Cir. 2024)

[7] Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306 (Fed. Cir. 2019)

USPTO Publishes Updated Subject Matter Eligibility Guidance Focusing on AI

By Michael Borella --

As required by President Biden's Executive Order 14110 ("Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence"), the U.S. Patent and Trademark Office has published an update to its subject matter eligibility guidance for examiners regarding inventions employing artificial intelligence (AI).  As this is the first update to the USPTO's subject matter eligibility guidance in almost five years, there was some hope that it would address stakeholders' long-held concerns.  These include the difficulty of crafting claims and a specification directed to an invention that incorporates AI, especially in view of the dramatic disparity in how examiners apply the law in view of the USPTO's previous guidance.

However, the updated guidance is remarkably non-substantive at best, and at worst appears to take the position that advances in AI and uses of AI are ineligible unless they are implemented in specific hardware circuitry or cause a significant change to the state of an ancillary system.  Moreover, the updated guidance largely reads as general eligibly guidance with few actual AI-specific considerations.

Indeed, the updated guidance makes it painfully clear that it (like the USPTO's previous guidance on the topic) "does not create any right or benefit, substantive or procedural, enforceable by any party against the USPTO."  In other words, examiners are free to ignore the updated guidance as they see fit, which is how examiners have approached the USPTO's previous subject matter eligibility guidance over the last decade.

In any event, it is not until the halfway point of the updated guidance that it addresses the USPTO's currently eligibility test.  In particular, the updated guidance focuses on Step 2A, prong one (determining whether a claim recites a judicial exception) and step 2A, prong two (determining whether the claim integrates the recited judicial exception into a practical application of the exception).  Unfortunately, the USPTO largely employs hypothetical examples in doing so.

Regarding Step 2A, prong one, the USPTO reminds us that "USPTO personnel must draw a distinction between a claim that 'recites' an abstract idea . . . and one that merely involves, or is based on, an abstract idea."  In the former case, the claim requires further eligibility analysis and in the latter case the claim is eligible.

The USPTO sets forth three hypothetical examples of claims that do not recite an abstract idea: (i) custom and specific circuits designed to implement arrays of neurons and synaptic weights, (ii) a processor, livestock herd monitor, and transmitter collectively arranged for monitoring health and activity in a herd of dairy livestock animals, and a "treatment method comprising administering rapamycin to a patient identified as having Nephritic Autoimmune Syndrome Type 3."  Notably, only the first of these examples even relates to AI.

The USPTO goes on to state that examiners should identify specific claim limitations that fall within the three groupings of abstract ideas:  mathematical concepts, certain methods of organizing human activity, and mental processes.  This leads to the rather absurd result that more specific recitations in a claim (which are encouraged by a large number of Federal Circuit eligibility opinions) can ultimately render a claim ineligible, whereas broader recitations of the same invention (which are discouraged by these Federal Circuit eligibility opinions) can result in a claim being eligible because it does not recite an abstract idea.

Regarding math, the USPTO essentially repeats it's thin and unworkable distinction between claims that recite mathematical concepts and claims that are based on or involve a mathematical concept.  In practice, examiners do not understand this distinction and the USPTO's terse discussion in the updated guidance suggests that they are not alone.  To state what should be obvious, all science and engineering advances involve mathematical concepts in one way or another -- a claim that recites "taking the sum of a first output and a second output" should not be subject to more scrutiny than a claim that recites "determining a result based on a first output and a second output."

The certain methods of organizing human activity category has been viewed expansively by the courts and some examiners to include anything remotely related to human activity.[1]  Here, the USPTO relies on three recent Federal Circuit eligibility opinions to flesh out the category.  The problem is that all three examples found claims to be ineligible.  It would be nice if the USPTO could provide at least a hint of what might not fall within this gaping chasm of a category.

On mental processes, the USPTO continues to apply what can only be considered a legal fiction.  In essence, the current practice is that any invention that, even in theory, could be performed by one or more human beings with thought, pencil and paper, or other tools, is a mental process even if it would take millions of years to obtain a useful result.  Indeed, the mental process category encompasses processes that are not performed mentally.

Here, the USPTO at least gives us one example of an invention that (in its view) does not recite a mental process ("a specific, hardware-based RFID serial number data structure [that is] uniquely encoded").  However, when compared to the other examples that do recite a mental process (e.g., "the collection of information from various sources and understanding the meaning of that information"), the USPTO appears to be slicing the bacon transparently thin.[2]

Moving on to Step 2A, prong two, the USPTO reiterates that examiners should determine whether "there are any additional elements recited in the claim beyond the judicial exception(s), and [evaluate] those additional elements individually and in combination to determine whether they integrate the exception into a practical application of that exception."  Despite the USPTO's reminder that claims are to be considered "as a whole" in this inquiry, such language is, in practice, a paper tiger.  Neither the USPTO nor the courts have ever explained what it means to consider claims as a whole, and both have routinely considered claims piecemeal while contending that they are actually considering claims as a whole.

There are three ways to find a claim non-abstract under Step 2A, prong two -- where the claim (i) improves the functioning of a computer, (ii) improves another technology or technical field, or (iii) is meaningfully limited to a particular technological environment.  But none of these have been defined in the case law, much less clearly defined.  The USPTO notes that specific solutions to specific problems are more likely to be eligible, but provides little insight that fleshes out this notion.  Instead, the USPTO again falls back on case law examples.

These examples demonstrate that an eligible invention may look ineligible if you tilt your head three degrees to the left and vice-versa.  For example, a very specifically-worded claim for determining haplotype phase based on pedigree data in human genetic sequences was an improvement over prior attempts to do so, but not a "technical" improvement because the entire claim was putatively a mathematical process that ran on general-purpose computers.

While the USPTO touted the claims of McRO, Inc. v. Bandai Namco Games America Inc. as an example of eligibility (which it is despite a lot of math being calculated by a general-purpose computer driving the thrust of the claimed invention), in practice it is rare that making an analogy to these claims will sway an examiner.  Instead (tilting their heads three degrees to the left), examiners typically conclude that any claim similar to McRO actually recites an ineligible abstract idea executing atop a non-specific chunk of silicon.[3]  In other words, there is little or no appreciable difference between the haplotype claim and those of McRO despite one being eligible and the other not.

Toward the very end of the updated guidance, the USPTO addresses AI-assisted inventions.  It states:

For the subject matter eligibility analysis under 35 U.S.C. 101, whether an invention was created with the assistance of AI is not a consideration in the application of the Alice/Mayo test and USPTO eligibility guidance and should not prevent USPTO personnel from determining that a claim is subject matter eligible.  In other words, how an invention is developed is not relevant to the subject matter eligibility inquiry.

Thus, the words of the claim matter but the use of AI in developing the underlying invention does not.  Aside from this clear statement, the updated guidance is cagey in general and surprisingly thin on AI-specific content.[4]

Practitioners have looked forward to iterations of the USPTO's subject matter eligibly guidance to add clarity and expedite prosecution.  After a decade of such guidance, it is clear that the USPTO's example-based approach has failed.  The chosen examples do not clarify the murky principles and distinctions that the words of the guidance set forth.  Moreover, the USPTO's reasoning regarding these examples is contradictory, muddled, opaque, and ultimately not helpful.  The greatest evidence for this is how different examiners apply the guidance in dramatically different ways.

Again, the fault lies with the Federal Circuit's incoherent parade of patent eligibility horribles masquerading as judicial decisions.  But instead of acknowledging that the emperor is stark raving naked, the USPTO once again tries to pretend otherwise.

It is time to stop.

[1] One of my favorite examples is the examiner I spoke to who insisted that fully-automated navigation of a self-driving vehicle was a method of organizing human activity because the goal of the invention was to deliver people from point A to point B.

[2] Credit for this confusion should be placed at the feet of the Federal Circuit, the decisions of which these examples are based.  

[3] A relevant definition of "analogy" in the American Heritage Dictionary is "[a] form of reasoning based on the assumption that if two things are known to be alike in some respects, then they are probably alike in other respects."  Too many examiners seem to think that, to be analogous, two things must be exactly the same.

[4] The USPTO has released three new sets of example claims to support the guidance.  They were not specifically addressed herein and may be discussed in a subsequent article.  In short, they do not provide enough further insight to render the updated guidance particularly helpful.

RegenxBio Inc. v. Sarepta Therapeutics, Inc. (D. Del. 2024)

By Kevin E. Noonan --

A consequence (predominantly negative) of the Supreme Court's recent foray into defining (however inadequately) the contours of patent-eligible subject matter is to give the district courts (and to a somewhat lesser extent, the Patent and Trademark Office) free rein to apply any Supreme Court precedent (no matter how archaic, ill-defined or incoherently reasoned) in invalidating claims on Section 101 grounds.  This tendency was exhibited in the district court invalidation of the Sequenom patent portfolio (Ariosa Inc. v. Sequenom, Inc.), and has arisen, phoenix-like in a decision in the District Court of Delaware, based on of all things, Funk Bros. Seed Co. v. Kalo Inoculant Co. (see RegenexBio Inc. v. Sarepta Therapeutics Inc., Civil Action No. 20-1226 RGA).

The case arose over Sarepta's use of an adeno-associated virus variant disclosed and claimed in RegenxBio's U.S. Patent No. 10,526,617* to make a gene therapy product to treat Duchenne's muscular dystrophy.  The '617 patent considered claim 1 to be representative:

1.  A cultured host cell containing a recombinant nucleic acid molecule encoding an AAV vp1 capsid protein having a sequence comprising amino acids 1 to 738 of SEQ ID NO: 81 (AAVrh.10) or a sequence at least 95% identical to the full length of amino acids 1 to 738 of SEQ ID NO: 81, wherein the recombinant nucleic acid molecule further comprises a heterologous non-AAV sequence.

The District Court considered the parties' arguments regarding subject matter eligibility by applying the tests enunciated in Mayo Collaborative Services v. Prometheus Laboratories, Inc. as further explicated in Alice Corp. v. CLS Bank International.  According to the District Court, Defendants asserted that the claims were directed to "naturally occurring rh.10 sequences," which were not patent eligible thereby, and further that the claims "monopolize" the use of these sequences in cultured host cells "for any research or commercial application" (perhaps supplying all the motivation the court needed for invalidating them).  Having "established" satisfaction of step 1 of the Mayo/Alice test as being directed to naturally occurring sequences, the District Court accepted that under step 2 of that test, the skilled worker would have had "all the tools needed to make and use cultured host cells containing nucleic acids encoding the full scope of the claimed capsid proteins."  (This argument echoes the rationale  enunciated successfully in In re Kubin, and unsuccessfully in In re Bell and In re Deuel, that having a method for making something was equivalent to having the composition itself, in the obviousness context.)  Generically, Defendants argued that "cultured host cells, recombinant nucleic acid molecules, heterologous non-AAV sequences" and other components were all well-known and hence fail step 2 of the test, illustrating the lessons of Sequenom and other instances where broad claiming and disclosure are used against a patentee in the eligibility context.  Defendants concluded their argument (and the District Court seemed to accept it) by asserting that the combination of the elements do not add an "inventive concept" that amounts to the requisite (and undefined) "significantly more" needed to confer eligibility in the face of the naturally occurring rh.10 sequences themselves.

Plaintiffs argued that the proper test was the "markedly different" test, satisfied here by the claim elements considered as a whole, i.e., the recombinant host cells that  was not naturally occurring and indeed were "structurally and functionally different."  Defendants limited their counter argument, according to the opinion, on the straw man that the rh.10 sequences were not themselves markedly different, rather than the recombinant cell that is the proper subject of the claim.

The District Court's rationale centered on whether the resulting cell represented a "change" from what occurred in nature, concluding it did not.  Relying on Funk Bros., the District Court opined that "taking 'two sequences from two different organisms and put[ting] them together' is no different than taking two strains of bacteria and mixing them together."  According to the opinion, the inventors here "have not changed any of the claimed invention's naturally occurring components" and "[w]ithout some change, the mere fact that the '617 patent's inventors combined natural products  and put them in a host cell does not make the invention patentable [(sic, patent eligible)] under §101" (ignoring that the combination is itself a change in the properties of the cell transformed into a recombinant cell).

The remainder of the District Court's analysis under step 2 followed the familiar regimen of selecting statements in the '617 patent specification relating to ways of producing the components of the claimed invention to illustrate the "well-known, routine, and conventional" nature thereof in support of the District Court's non-eligibility conclusion (as well as a short detour regarding whether use of the claimed invention for gene therapy, as used by Defendants, would make a difference, the District Court concluding that it would not).

The analysis applied by the District Court exemplifies how the complicated "framework" set forth under the Supreme Court tests in Mayo and Alice can (and in this case did) encourage courts to lose the forest for the trees.  This is illustrated by the District Court's reliance on Funk Bros., wherein the combination of two naturally occurring species of bacteria was held to be ineligible for patenting.  The difference, of course, is there was no change in either species of bacteria in that case.  In this case, the cells have been transformed by introduction of the AAV vector ("a recombinant nucleic acid molecule," per se non-naturally occurring) that further comprises "a heterologous non-AAV sequence," which combination does not occur in nature and is "a non-naturally occurring manufacture or composition of matter and a product of human ingenuity 'having a distinctive name, character and use'" under Chakrabarty.  The District Court founders on the specifically recited AAV sequence (encoding AAV vp1 capsid protein) being itself naturally occurring, another example of a court cherry-picking the elements of a claim despite avowing to be considering the claim "as a whole," as the District Court does here (Defendants encouraging such foundering by their arguments set forth in the opinion.)

Ironically, the District Court's decision is contrary to Justice Thomas's opinion in AMP v. Myriad Genetics, which it purports to apply.  Specifically the opinion states:

[T]his case does not involve patents on new applications of knowledge about the BRCA1 and BRCA2 genes.  Judge Bryson aptly noted that, "[a]s the first party with knowledge of the [BRCA1 and BRCA2] sequences, Myriad was in an excellent position to claim applications of that knowledge. Many of its unchallenged claims are  limited to such applications" [emphasis in opinion].

The meaning of Funk Bros. is similarly misunderstood (albeit a misunderstanding shared by most in view of the sparse nature of Justice Douglas's language in the Court's opinion).  As explained by Justice Frankfurter's concurring opinion:

Insofar as the court below concluded that the packaging of a particular mixture of compatible strains is an invention and as such patentable, I agree, provided not only that a new and useful property results from their combination, but also that the particular strains are identifiable and adequately identified.  I do not find that Bond's combination of strains satisfies these requirements.  The strains by which Bond secured compatibility are not identified and are identifiable only by their compatibility.  . . .  [The patentee] appears to claim that since he was the originator of the idea that there might be mutually compatible strains and had practically demonstrated that some such strains exist, everyone else is forbidden to use a combination of strains whether they are or are not identical with the combinations that Bond selected and packaged together.  It was this claim that, as I understand it, the District Court found not to be patentable, but which, if valid, had been infringed.  . . .  The consequences of such a conclusion call for its rejection.  Its acceptance would require, for instance in the field of alloys, that if one discovered a particular mixture of metals, which when alloyed had some particular desirable properties, he could patent not merely this particular mixture but the idea of alloying metals for this purpose, and thus exclude everyone else from contriving some other combination of metals which, when alloyed, had the same desirable properties.  In patenting an alloy, I assume that both the qualities of the product and its specific composition would need to be specified.  The strains that Bond put together in the product which he patented can be specified only by the properties of the mixture.

The careless, improvident, and unnecessary resurrection of Funk Bros. in the Supreme Court's Myriad decision, indicating the Court's desire to re-impose its own jurisprudence over that developed by the Federal Circuit, thus bears fruit here.  As noted by a former Solicitor General, the Federal Circuit spent 30 years "quietly walking away from" Supreme Court decisions it found to have been wrongly reasoned or decided, but the consequence of the correction is shown in this case, where such a decision is used in the broader context of subject matter eligibility to invalidate heretofore conventionally eligible claims.

It should also be noted that co-plaintiff in this case is the University of Pennsylvania, which along with the Biden administration's equally ill-considered effort to warp the march-in rights provisions of the Bayh-Dole Act into a basis for the government to set drug prices threatens to throw a spanner into the engine of innovation (at least for biotechnology and pharmaceuticals).  The Twentieth Century gave us all an object lesson in governmental overreach in managing an economy and those whose inventive efforts provide the basis for real-world advances in technology, the economy, and citizens' lives.  One would think (incorrectly, it would seem) that lesson having been learned the hard way would inform governmental actions in the Twenty-First century.

* The '617 patent had an earliest priority date of November 12, 2002 and thus expired on November 12, 2022.

Top Stories of 2023: #5 to #7

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 17th annual list of top patent stories.  For 2023, we identified ten stories that were covered on Patent Docs last year that we believe had (or are likely to have) a significant impact on patent practitioners and applicants.  On Monday, we counted down stories #10 to #8, and today we count down stories #7 to #5, as we work our way towards the top four stories of 2023.  As with our other lists (2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, and 2007), links to our coverage of these stories (as well as a few links to articles on related topics) have been provided in case you missed the articles the first time around or wish to go back and have another look.  As always, we love to hear from Patent Docs readers, so if you think we left something off the list or disagree with anything we included, please let us know.  In addition, we will be offering a live webinar on the "Top Patent Law Stories of 2023" on January 23, 2024 from 10:00 am to 11:15 am (CT).  Details regarding the webinar, which will focus on a few of the most important stories on this year's list, can be found here.

7.  University of California/Berkeley Appeals PTAB Ruling in CRISPR Interference; FDA Approves CRISPR Gene Editing Treatment

In December 2022, the Patent Trial and Appeal Board rendered its decision on Preliminary Motions in Interference No. 106,133 between Senior Party Sigma-Aldrich and Junior Party The Broad Institute, Harvard University, and MIT (collectively, "Broad").  As with the priority phase in co-pending Interference Nos. 106,126, No. 106,127, and No. 106,132, the Board suspended the priority phase in Interference No. 106,133 until the appeal in Interference No. 106,115 has been decided by the Federal Circuit.  2022 and 2023 saw briefing in that appeal.

Meanwhile, the significance of the final outcome in the CRISPR interferences was demonstrated last fall, when the U.S. Food and Drug Administration's Cellular, Tissue, and Gene Therapies Advisory Committee announced on October 27 that exagamglogene autotemcel (exa-cel), which was the subject of biologics license application (BLA) 125787 from Vertex Pharmaceuticals, Inc. in collaboration with CRISPR Therapeutics (Zug, Switzerland) and provides for the first time gene therapy for sickle cell anemia, was shown to be effective, having 29 of 30 patients stay pain-free for 18 months.  On October 31, the Advisory Committee issued its recommendation that exa-cel is safe for clinical use, and the FDA then approved the treatment on December 8.  The treatment, being marketed as CASGEVY, is the first CRISPR-based gene-editing therapy to be approved in the U.S.

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

• "FDA Signals Willingness to Approve CRISPR-Based Treatment for Sickle Cell Anemia," November 2, 2023
• "Broad Files Reply Brief in Interference No. 106,115 Cross-Appeal," September 7, 2023
• "CVC Files Response and Reply Brief in Interference No. 106,115 Appeal," August 27, 2023
• "Amici Support Reversal of PTAB Decision in CRISPR Interference," July 25, 2023
• "Broad Files Opening Brief and Cross-Appeal in CRISPR Interference," July 23, 2023
• "CVC Appeals PTAB Decision in CRISPR Interference," July 12, 2023
• "PTAB Rules on Preliminary Motions in Interference No. 106,133," January 22, 2023

6.  Judicial Council of Federal Circuit Suspends Judge Newman

Efforts to have Judge Pauline Newman, Circuit Judge on the Court of Appeals for the Federal Circuit, removed from the Federal Circuit for being unfit or guilty of misconduct were the subject of several reports in mid-2023.  In September, the Judicial Council of the Federal Circuit ordered Judge Newman to be suspended from the court for one year.  The Judicial Council's Order repeated allegations made previously against Judge Newman, supplemented with 16 (sometimes) heavily redacted Exhibits and notations and other supporting exhibits that were redacted in their entirety for confidentiality purposes.  The arguments and supporting exhibits were apparently provided to justify the grounds for the decision, which were Judge Newman's purported refusal to cooperate with the Special Committee's investigation into her competency (despite the Judge having provided medical and psychological results from her own doctors rather than the Committee's hand-picked ones).  The suspension remains subject to Judge Newman's on-going lawsuit in the D.C. District Court asserting that the Council's suspension is unconstitutional and a violation of Judge Newman's due process rights.

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

• "Judge Newman Suspended for One Year by Federal Circuit," September 20, 2023
• "Federal Circuit Special Committee Recommends One-Year Suspension of Judge Newman," August 6, 2023
• "Federal Circuit Special Committee Responds to Judge Newman's Counsel's Request for Clarification Regarding Misconduct Hearing," June 21, 2023
• "Judge Newman Matter Continues," June 20, 2023
• "Judge Newman and the On-Going Attempts to Remove Her from the Federal Circuit," May 21, 2023

5.  Supreme Court Denies CareDx Petition; Senators Coon & Tillis Try to Fix Patent Eligibility (Again)

In May, CareDx and Stanford University filed a petition for certiorari in CareDX, Inc. v. Natera, Inc. and CareDx, Inc. v. Eurofins Viracor, Inc.  At the time, we noted that the arguments in the petition threaded a very narrow needle in giving the Court a reason to grant certiorari and emphasize (as has been emphasized before) the need to do so.  In particular, the petition directed the Court's attention to the "heav[y] investment CareDx made in bringing this technology to market" and infringing behavior of both Natera and Eurofin in bringing their own "copycat" products to market.  Those hoping for a certiorari grant (and positive outcome), however, were frustrated (yet again) when the Court denied the patentees' petition in October.

Given the refusal of the Supreme Court to wade back into the subject matter eligibility waters, Senators Coons and Tillis, who chaired a series of Congressional hearings on patent eligibility in 2019, who have asked the U.S. Patent and Trademark Office for its statistics and other information on patent eligibility, and who have proposed several bills providing various iterations of legislative solutions, proposed their latest attempt to provide a legislative solution in June when they introduced "The Patent Eligibility Restoration Act of 2023."  As we noted at the time, this proposal marks the third time that one or both of the Senators have proposed or introduced a bill to revise § 101.  The first two attempts garnered discussion but little tangible progress, leaving the patent community feeling like Charlie Brown repeatedly getting the football yanked away.

In one bit of good news on the subject matter eligibility front, the storied case of American Axle v. Neapco Holdings entered a new chapter in July -- not the final chapter, but the plot thickened considerably.  We provided a recap at the time, noting that Judge Stark, then of the District Court for the District of Delaware, had found all asserted claims of U.S. Patent No. 7,774,911 invalid under 35 U.S.C. § 101 as being directed to a law of nature implemented by well-understood, routine, and conventional means, a decision that was affirmed by the Federal Circuit, with the majority subsequently withdrawing its original opinion and handing down a revised opinion (finding claim 22 still ineligible but vacating and remanding the District Court's decision on claim 1) in response to a petition for en banc rehearing, and the Supreme ultimately denying American Axle's petition for certiorari.  On remand, Judge Williams (who had taken on the case given Judge Stark's promotion to the Federal Circuit), denied Neapco's motion for summary judgment of invalidity pursuant to § 101 and granted American Axle's motion for summary judgment of no invalidity.

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

• "American Axle's Claims Found Eligible on Remand," August 1, 2023
• "Senators Tillis and Coons Once More Attempt to Fix Patent Eligibility," June 25, 2023
• "Senate Bill Proposed to Provide Subject Matter Eligibility Solution," June 22, 2023
• "Can Judge Michel and John Duffy Convince the Supreme Court to Revisit Subject Matter Eligibility?" May 31, 2023
• "Stanford Asks Supreme Court to Revisit Subject Matter Eligibility on Diagnostic Claims," May 3, 2023
• "Sequoia Technology LLC v. Dell Inc. (Fed. Cir. 2023)," April 23, 2023
• "On Alice Rejections per USPTO Technical Center," March 6, 2023
• "ITC Takes Section 101 to Its Illogical Extreme," March 1, 2023
• "Chromadex, Inc. v. Elysium Health, Inc. (Fed. Cir. 2023)," February 15, 2023
• "PTAB Remains Hostile to Section 101 Appeals," January 31, 2023
• "The Mental Process Exception to Patent Eligibility is Remarkably Brainless," January 9, 2023

PureCircle USA Inc. v. SweeGen, Inc. (Fed. Cir. 2024)

By Kevin E. Noonan --

Not surprisingly, the Federal Circuit visited upon Plaintiff/Appellant PureCircle two of the Four Horsemen of the Biotech Patent Apocalypse* in a decision affirming the District Court's invalidation of the claims asserted against Defendant SweeGen in PureCircle USA Inc. v. SweeGen, Inc.

To recap, PureCircle sued SweeGen for infringing U.S. Patent Nos. 9,243,273 (claims 1-14) and 10,485,257 (claims 1-7) over methods for making particular glucosylated forms of the natural sweetener steviol obtained from the Stevia rebaudiana plant.  The plant produces a variety of rebaudioside variants having various levels of glycosylation; the most predominant of these in the plant is termed "RebA" but this is not the most commercially valuable form.  That form, termed variably "RebX" and "RebM" contains six glucose residues on the steviol core, illustrated in the opinion by this diagram:

Claim 1 of each of the asserted patents are relevant to the decision of both the District Court and the Federal Circuit:

Claim 1 of the '257 patent:

A method for adding at least one glucose unit to a steviol glycoside substrate to provide a target steviol glycoside, comprising contacting the steviol glycoside substrate with a recombinant biocatalyst protein enzyme comprising UDP-glucosyltransferase, wherein the target steviol glycoside is Rebaudioside X.

Claim 1 of the '273 patent:

A method for making Rebaudioside X comprising a step of converting Rebaudioside D to Rebaudioside X using a UDP-glucosyltransferase, wherein the conversion of Rebaudioside D to Rebaudioside X is at least about 50% complete.

The District Court granted summary judgment against PureCircle, finding that claims 1-5 of the '257 patent and claims 1-11 and 14 of the '273 patent were invalid for reciting patent-ineligible subject matter under 35 U.S.C. § 101.  According to the Court, the claims were directed to the natural law of converting rebaudiosides, and specifically RebD, into RebM.  In the Court's view, "there is no dispute that the conversion of steviol glycosides and Reb D to Reb M using UGT enzymes is a natural process."  The Court found this characterization to be supported by disclosure in the specification, which was expressed as disclosing a "biocatalytic process," defined as "the use of natural catalysts, such as protein enzymes, to perform chemical transformations on organic compounds" (emphasis added).  The Court relied on Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC (Fed. Cir. 2019), for the proposition that "[s]ynthetically-created chemical compositions that are structurally and functionally identical to their naturally-occurring counterparts . . . are not patent eligible" and the admission in the specification that the recombinant enzymes were structurally and functionally "identical" to the naturally occurring enzymes.  The District Court rejected the distinction PureCircle attempted to draw for "method of preparation" claims analogous to CellzDirect and expressly with regard to any suggestion that such claims are per se patent eligible, as being inconsistent with precedent particularly the Supreme Court's rationale in Alice v CLS Bank (2014).

The District Court also found that all asserted claims were invalid for failure to satisfy the written description requirement of 35 U.S.C. § 112(a), based on the parties' stipulation that the UGT enzyme recited for converting steviol glycosides and Reb D to Reb M was defined as "[a] type of enzyme that is capable of transferring a glucose unit from a uridine diphosphate glucose molecule to a steviol glycoside molecule."  From this, the Court held that the enzyme was functionally (as opposed to structurally) defined and thus invalid under Juno Therapeutics, Inc. v. Kite Pharma, Inc., 10 F.4th 1330, 1337 (Fed. Cir. 2021).  Pure Circle appealed.

The Federal Circuit affirmed, in an opinion by Judge Dyk joined by Judges Schall and Stark.  The opinion first addressed the Section 112(a) grounds for invalidating all claims of the patents, reciting the requirement that, for a genus claim the required written description must disclose "either a representative number of species falling within the scope of the genus or structural features common to the members of the genus so that one of skill in the art can 'visualize or recognize' the members of the genus," the standard first set forth by Judge Lourie in Regents of the Univ. of California v. Eli Lilly & Co., 119 F.3d 1559, 1568–69 (Fed. Cir. 1997).  The panel agreed with the District Court's characterization of the '257 and '273 patent claims as being "genus claims using functional language."  SweeGen argued (echoing Sanofi's similar arguments for the enablement requirement in Amgen v. Sanofi) that the number of UGT enzymes based on the one expressly disclosed enzyme (UGT76G1) that would satisfy the functional definition was "at least one trillion" (using calculations recited in the panel's opinion), noting that there were 733 UGT enzymes known in 2012 from which various permutations of mutations could produce the cited astronomical number.  Accordingly, SweeGen argued, the common '257 and '273 patent specification did not disclose a representative number of species nor did they disclose any common structural feature(s).  Although PureCircle was able to argue that, rather than trillions of species there might be as many as 9,000 this argument was unpersuasive to both the District Court and the Federal Circuit; the Court opined that characterization of 9,000 species comprised "extensive trial and error testing" and the need thereof was contrary to finding that an adequate written description was provided in the specification, citing Novozymes A/S v. DuPont Nutrition Biosciences APS, 723 F.3d 1336, 1346 (Fed. Cir. 2013).  In addition, the Court was unconvinced by PureCircle's argument that the one disclosed UGT enzyme was sufficient to satisfy the written description requirement because it disclosed (purportedly inherently) the active site capable of catalyzing the conversion reaction(s).  The possibility that there may be other (unknown) enzymes capable of catalyzing the conversion reaction(s) and the absence of any express disclosure of the structure of UGT76G1 convinced the Federal Circuit that the situation here was analogous to the broad disclosure of scFv molecules in Juno v. Kite and thus that the written description requirement based on structural features was not satisfied.  And the opinion notes that as in Ariad v. Eli Lilly & Co.:

Such claims merely recite a description of the problem to be solved while claiming all solutions to it and . . . cover any compound later actually invented and determined to fall within the claim's functional boundaries—leaving it to the pharmaceutical industry to complete an unfinished invention.

The opinion also cites more recent cases, including AbbVie Deutschland GmbH & Co., KG v. Janssen Biotech, Inc., 759 F.3d 1285, 1300 (Fed. Cir. 2014), and Idenix Pharms. LLC v. Gilead Scis. Inc., 941 F.3d 1149, 1164 (Fed. Cir. 2019), in support of this conclusion.

The convergence of the District Court's invalidity determinations based on Sections 101 and 112(a) arose in the opinion with regard to claim 14 of the '273 patent, which is limited to the expressly disclosed UGT76G1 species of UGT enzyme.  The Federal Circuit opinion turns in this regard to the Section 101 analysis, affirming the District Court's finding of invalidity for claim 14.  As set forth in the opinion, the Court held that "[t]o the extent that claim 14 claims a 'method for making Rebaudioside X comprising a step of converting Rebaudioside D to Rebaudioside X using a UDPglucosyltransferase' it claims a natural phenomenon," thus satisfying the first step of the Mayo/Alice formula for finding Section 101 invalidity.  In response to PureCircle's argument that the patentable distinction in this claim is that when in purified form the enzyme can achieve conversion of at least 50% of RebD to RebM (which is not achieved in the natural state), the opinion asserts that "[t]he problem with PureCircle's argument is that the 50% completion is itself an abstract idea."  Citing SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1167 (Fed Cir. 2018), the Federal Circuit asserts that "claim 14 of the '273 patent 'd[id] not specify how to achieve a particular purity or conversion percentage; rather, [it] only recite[s] the resulting percentages,'" quoting the District Court's opinion.  This portion of the opinion illustrates nicely the rhetorical gymnastics that the entire edifice of subject matter eligibility jurisprudence has created; after all, taken at face value this analysis introduces a requirement that the mechanistic details of how a chemical reaction catalyzed by an enzyme be disclosed, rather than merely demonstrating that the enzyme in the presence of starting compounds can produce the desired product.  Not surprisingly in view of this heretofore unknown requirement, the opinion notes that "PureCircle made no step two Alice/Mayo arguments before us or the district court" and thus affirmed the District Court's finding of invalidity for claim 14.

The history of the Federal Circuit's explication of the Supreme Court's subject matter eligibility opinions is replete with decisions and rationales that are not for the faint-hearted, wherein methods for producing truck axles, Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 967 F.3d 1285, 1292 (Fed. Cir. 2020); electric car chargers, ChargePoint v. SemaConnect; garage door openers, Chamberlain Group v. Techtronic Industries; and digital cameras, Yu v. Apple (Fed. Cir. 2021), were considered abstract.  In each case, the temptation to characterize the application of the tortured calculus of subject matter eligibility as having reached its nadir has been tempting, but the capacity for even greater flights of analytical fancy seems to have no limit.  Sadly (for innovation, competitiveness, and the U.S. patent system), we have come very far from the simple rubric that "anything under the sun made by man" as a rational workable, subject matter eligibility standard.

PureCircle USA Inc. v. SweeGen, Inc. (Fed. Cir. 2024)
Nonprecedential disposition
Panel: Circuit Judges Dyk, Schall, and Stark
Opinion by Circuit Judge Dyk

* Those four being subject matter eligibility, written description, enablement, and obviousness-type double patenting.

American Axle's Claims Found Eligible on Remand

By Michael Borella --

The storied case of American Axle v. Neapco Holdings has entered a new chapter -- not the final chapter but the plot has thickened considerably.  As a recap, Judge Stark, then of the District Court for the District of Delaware, found all asserted claims of U.S. Patent No. 7,774,911 invalid under 35 U.S.C. § 101 as being directed to a law of nature implemented by well-understood, routine, and conventional means.

The main thrust of this opinion and those that follow was focused on claims 1 and 22, which read:

1.  A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising:
    providing a hollow shaft member;
    tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and
    positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell mode vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending mode vibrations in the shaft member, the at least one liner being tuned to within about ±20% of a bending mode natural frequency of the shaft assembly as installed in the driveline system.

22.  A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising:
    providing a hollow shaft member;
    tuning a mass and a stiffness of at least one liner, and
    inserting the at least one liner into the shaft member;
    wherein the at least one liner is a tuned resistive absorber for attenuating shell mode vibrations and
    wherein the at least one liner is a tuned reactive absorber for attenuating bending mode vibrations.

A Federal Circuit majority affirmed Judge Stark, adding their observation that the specification of the '911 patent does not disclose how to achieve the claimed goals as further grounds of ineligibility.  Judge Moore penned a vociferous dissent questioning the majority's reading of the record and application of the Alice Corp. v. CLS Bank Int'l two-part eligibility test.

Less than a year later, in response to a petition for en banc rehearing, the majority withdrew its original opinion and handed down a revised opinion finding claim 22 still ineligible but vacating and remanding the District Court's decision about claim 1.  The majority also took the opportunity to express its disagreement with Judge Moore's view of the facts and relevant law.

American Axle filed a petition for Writ of Certiorari with the Supreme Court.  After a long wait, the Court denied the petition.  Thus, the majority's reasoning is still good law.  More correctly, it is still binding precedent -- whether the decision was good is still hotly debated.  Indeed, the reasoning of American Axle was instrumental in an abomination of an ITC decision finding a diamond-encrusted drill bit to be an abstract idea.

Today, we have a decision on remand to the District Court.  Judge Williams has taken on the case, given Judge Stark's promotion to the Federal Circuit.  The issues under dispute were cross-motions related to the eligibility of claim 1 and its dependent claims under § 101, as well as validity under § 102 and non-infringement.  Here, we focus just on the § 101 dust-up.

As an initial matter, the parties disagreed as to whether the Federal Circuit's invalidation of claim 22 could be imputed to claim 1.  Judge Williams quickly put this matter to rest, finding that:

[T]he Federal Circuit expressly stated that "Claim 1 is different than claim 22," and "that the 'characteristics' that can be 'tuned' in claim 1 include variables other than mass and stiffness," which were the variables the Federal Circuit relied on in finding that claim 22 was directed to a natural law, i.e., Hooke's law.

Another preliminary motion went in the other direction, with Judge Williams ruling that the issue of whether claim 1 is directed to an abstract idea (as opposed to a natural law) was not waived by Neapco's lack of contentions on that point until now.  Notably, "the Federal Circuit explicitly remanded the case for the district court to address this alternative eligibility theory, i.e., the abstract idea theory, in the first instance."

Addressing the substance of claim 1 under Alice, Judge Williams started with the premise that "[t]he Alice step one inquiry considers what the patent asserts to be the focus of the claimed advance over the prior art."  He wasted no time concluding that the claimed invention was "directed to a method of designing and manufacturing a tangible propshaft with reduced vibration that includes tuning and  positioning a liner within a propshaft to attenuate bending and shell mode vibration."  According to the judge, this is "[f]ar from an abstract idea," as the claims involve a tangible system and had "an observable real-world impact."

In this regard, Neapco's position that the claims merely recite a "desired result of attenuating certain vibration modes and frequencies" based on abstract concepts of tuning and positioning failed to consider the claims as a whole.  Judge Williams went back to Diamond v. Diehr's prohibition on dissecting claims in the § 101 calculus to support this point.

For further support, Judge Williams appears to agree with Judge Moore in principle that the specification describes "a meaningful improvement to the design and manufacturing of propshafts."  He also notes that "the specification provides the design parameters a person of ordinary skill in the art should use to tune a liner to reduce propshaft vibration . . . [o]ther embodiments illustrate how tuned liners may be physically structured in several distinct ways."  Moreover, the dependent claims explicitly recite how to achieve the specific damping of two modes of vibration.

Neapco's attempt to bifurcate the claims under part one of Alice in order to ignore the "conventional" tangible aspects was, in the opinion of the judge, blurring the line between part one and part two of the test.  Moreover, he was skeptical of Neapco's contentions as improperly incorporating arguments against novelty rather than eligibility.

Accordingly, the District Court found claim 1 and its dependents to not be non-abstract and eligible under part one of Alice.  This obviated the need for a part two analysis.

While this opinion is a breath of fresh air in the patent eligibility swamp (if for no other reason than it simply making sense), the story is still not over.  It is almost inevitable that Neapco will appeal again to the Federal Circuit.  And, it is likely that the appellate proceeding will go against American Axle.

Judge Williams relies heavily on the principles of Diehr, which were modified if not overruled by Alice.  There are numerous precedential Federal Circuit opinions that can be used to counter his findings on the combining of parts one and two of Alice (the Federal Circuit routinely bends it's understanding of Alice to fit its desired outcome), as well as his comments on whether novelty can be considered under part one (it can and has been in many cases including some that Judge Williams quotes for other purposes).  Additionally, if Judge Stark ends up on the panel that hears the appeal, it is unlikely that he will be willing to contradict what he initially concluded about the eligibility of claim 1 over five years ago.

Memorandum Order by District Judge Gregory B. Williams

Can Judge Michel and John Duffy Convince the Supreme Court to Revisit Subject Matter Eligibility?

By Kevin E. Noonan --

Einstein's aphorism that doing the same thing over and over again and expecting a different outcome is a hallmark of madness (or at least an inability to learn from the past) inevitably comes to mind when perusing the recent history of attempts to persuade, cajole, or shame the Supreme Court to revisit its recent subject matter jurisprudence.  While the many certiorari petitions have amply demonstrated the dysfunctional nature of the jurisprudence (at least in its application by the lower courts) it has seemed that no matter how the evidence was presented, or the outrageousness of the application (see "Supreme Court Denies Cert in American Axle"), or how many times the government joins the call in response to a request for the views of the Solicitor General (see, e.g., "Solicitor General Weighs In On Patent Eligibility Question"), the Court has been steadfast in denying cert.

But it is also the case that sometimes the way of getting a different outcome can be in how the question is presented to the Court (and it is certainly true that the arguments made in the over 60 cases where cert was denied have been similar to the point of repetitiveness).  While it is too soon to tell (or to raise any hopes) in this regard, it may be significant that a recent amicus brief on behalf of former Federal Circuit Chief Judge Paul Michel and Professor John Duffy in CareDX v. Natera has prompted the Court to ask the Respondent (the prevailing party who espoused the Court's decisions and analytical structure to invalidate the patent on subject matter ineligibility grounds) to address their arguments.  (It also may be significant that Professor Duffy was instrumental in convincing the Court to review the Federal Circuit's application of obviousness law in KSR Int'l v. Teleflex several years ago.)  The resulting indication of the Court's interest, intellectual curiosity or belated sense of responsibility for the utter mess that is subject matter eligibility law (particularly with regard to diagnostic methods) certainly merits consideration of the arguments raised in this amicus brief.

The difference in the Michel/Duffy approach is to focus on what they characterize as a clear instance of Congress overruling "judge-made law" in enacting the 1952 Patent Act and the "continuing trend of uncertainty and inconsistency in patent-eligibility jurisprudence" engendered by how the lower courts have been implementing the Court's subject matter eligibility decisions to contradict those statutory commands.  And of course this state of affairs resulting in an undermining of the "innovation-promoting goals of U.S. patent law."

The statute at issue has been codified under 35 U.S.C. § 100(b) which defines a subject matter eligible "process" to "include a new use of a known process."  This definition was included in the 1952 Act, amici argue, to expressly overrule 19th Century judge-made law that held a new use of known technology was patent-ineligible, constituting a "clear example in which the judicial gloss on patentable subject matter has been legislatively rejected," citing John F. Duffy, Rules and Standards on the Forefront of Patentability, 51 Wm. & Mary L. Rev. 609, 632 (2009).  The Federal Circuit erred, the brief argues, in its determination that the methods recited in the claims were "conventional" despite the fact that "none of [them] are found in nature (and many of which were not even possible within living memory)."  (It will be recognized that if persuasive this argument would severely limit if not abolish the second step of the Mayo/Alice test as enunciated by Justice Breyer in Mayo Collaborative Services v. Prometheus Laboratories, Inc., that "inventiveness" was negated where the application of a natural law was "routine, well-understood or conventional.")  Amici argue that this purported "conventionality" is "irrelevant to the patent-eligible inquiry when the process is directed to statutorily defined patent-eligible (rather than patent ineligible) subject matter."

The brief argues that the law of patent-eligibility needs "clarification," citing the litany of cases illustrating the disarray in this area of the law.  This includes reminding the Court that the Justices themselves have asked for the Solicitor General's views in five recent cases (Tropp v. Travel Sentry, Inc., 143 S. Ct. 361 (2022); Interactive Wearables, LLC v. Polar Electro Oy, 143 S. Ct. 78 (2022); Am. Axle & Mfg., Inc. v. Neapco Holdings LLC, 142 S. Ct. 2902 (2022); Hikma Pharm. v. Vanda Pharm., Inc., 140 S. Ct. 911 (2020); and HP Inc. v. Berkheimer, 140 S. Ct. 911 (2020)).  The brief also cites statements from Chief Judge Moore (in Am. Axle & Mfg., Inc. v. Neapco Holdings, LLC, dissenting), Judge Dyk (Ariosa Diagnostics, Inc. v. Sequenom, Inc.), and Judge Hughes (Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC) in their opinions asserting the need for "further explication of eligibility standards" from the Court, as well as similar sentiments from the U.S. Patent and Trademark Office.  The issue is framed as a conflict with the Executive Branch, which "continues to issue patents only to see them invalidated in the Federal Circuit."  Outside the government, the brief cites observations from legal academics ("[t]he law of patentable subject matter is a mess," Mark Lemley, testifying before the Senate Judiciary Committee on June 4, 2019) and "[n]umerous others in the business and legal communities," citing testimony from those hearings.

Moreover, the brief argues, the decision is wrong for "overlook[ing] the Patent Act's text and conflict[ing] with th[e] Court's precedent."  On the facts, the brief argues that the decision "disregarded the specific, technologically advanced steps of the claimed processes" as well as relying on "conventionality" of the recited methods, which (as has long been recognized even in the briefing by the government in Mayo) "conflat[ed] patent eligibility (under § 101) with the requirements for patentability (in §§ 102, 103, and 112)."  In doing so, amici argue that the Federal Circuit acted contrary to the Court's mandates in Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980) (quoting United States v. Dubilier Condenser Corp., 289 U.S. 178, 199 (1933)), that "courts should not read into the patent laws limitations and conditions which the legislature has not expressed" (while recognizing in other precedent that there are "implicit exceptions" to patent eligibility including the meaning of the term "process").

Starting with the text of the statute (which "must be the starting point") the standard is that a new and useful process or improvement thereof is recited in Section 101 and the term "process" defined in Section 100(b) as a "process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material."  Taken together, amici argue, "a new process that is presented as an improvement on a known useful process is presumptively patent eligible."  And in enacting this definition of "process" they argue that merely because a process was known or, in the Court's language, "conventional" was not enough to per se determine the process to be patent-ineligible subject matter.  The brief recognizes that conventionality is a relevant consideration for novelty or obviousness but states that:

To interpret § 101 as imposing a strict "non-conventionality" standard for patentable subject matter—while not respecting the definition of§ 100(b) and the explicit roles of § 102 and § 103—is to wander so far from the words of the Patent Act as to end up in the wilderness of atextualism.

The brief cites the Court's decision in Diamond v. Diehr as "an instructive example" of how to reconcile the implicit judicial exceptions to subject matter eligibility with the statutory text.  Even though the claimed rubber-curing process in Diehr was "conventional" that was not dispositive, because the improvement (using the Arrhenius equation) was an application of a scientific principle to improve a known process, producing a new process for curing rubber (a judicial principle also recognized in Cochrane v. Deener, 94 U.S. 780 (1876) according to the brief).  None of these principles or considerations were cited or addressed in the Federal Circuit's opinion according to the brief, important due to the similarities between the claimed invention at issue and the patent-eligible claims in Diehr:

Both processes involve complex chemical transformations, not performed in nature, and they both utilize scientific principles to create "new and useful improvement[s]" of known processes.  They both incorporate data analysis to yield a useful result.  They both offer specific technological solutions to a problem that remained unsolved for many years.

The argument is presented as being capable of a narrow focus (albeit with broad implications), wherein the Court could "delineate when improvements of technological processes are patent eligible and to correct a decision that conflicts with the statutory text and this Court's precedent."

The brief further explicates reasons why the Federal Circuit erred in its decision, including that the claims "involve specific, complex biochemical reactions that do not occur in nature and occur only through the provision of human ingenuity" without preempting any "fundamental natural phenomenon" (extensively explicating these differences).  The brief also notes that the recited "specific, complex biochemical reactions" in many instance have themselves been patented in "[t]oo any examples" to be listed in the brief.  And the inclusion of conventional steps is not in itself enough to invalidate an "otherwise novel and nonobvious technological process" under Diehr, amici argue.  The Federal Circuit's analytical error was in creating an "overly simplistic 'summary' of the claimed processes" that "present[ed] the invention at a level of abstraction that eviscerates key features of the claimed processes."  The brief sets forth as an illustration of a better alternative by analogy methods for refining and analyzing precious metals and presents a detailed comparison with patented methods on this subject matter (for which the brief argues "there is no reasonable dispute about patent eligibility").  In doing so, the brief illustrates how these patent-eligible processes could themselves be presented at a sufficiently high level of abstraction so as to be deemed patent-ineligible.  And this is something that the Federal Circuit has done consistently with regard to diagnostic method claims, amici argue, even in instances (such as Ariosa Diagnostics) where what is claimed is a "new diagnostic method [that] is novel and unforeseen, and is of profound public benefit— 'a significant contribution to the medical field,'" Newman, J., dissenting).  The brief also contains argument regarding the doctrinal impropriety of conflating Section 101 requirements with those of Sections 102, 103, and 112, making reference to arguments by the Solicitor General in its Tropp brief.  And the brief cites the consequences of holding to be patent-ineligible "biological and chemical processes that are designed to provide life-saving diagnostic results," that are "not products of nature" and do not claim "the fundamental, scientific principle" but instead "solve[] a technological problem."

It should be noted the care with which amici approach the imputed basis for the need for the Court to provide guidance, wherein the brief states that "[t]his reassessment [by the Court, requested by amici and others] need not overrule the Alice/Mayo test, but it would allow a more faithful application of this Court's precedent to achieve the objective of the Constitution's Patent Clause and would respect the text of the Patent Act."  In this regard, the brief also notes the Court's reliance in Mayo and Alice on pre-1952 decisions and how those decisions were directed to "patentability" and not patent "eligibility," and that the citation in Mayo of Parker v. Flook with regard to an "inventive concept" was based on only two uses of the term and no reliance on any precedent for what the term meant.  The brief also mentions that the term "inventive concept" was absent in Funk Brothers Seed Co. v. Kalo Co., 333 U.S. 127, 130 (1948), and Mackay Radio & Telegraph Co. v. Radio Corp. of America, 306 U.S. 86, 94 (1939), as well as Benson v. Gottschalk, and that in this regard the Court's decision in Diehr overruled Flook until it was rehabilitated (or resurrected) in Mayo.  But "'inventive Concept' as a key requirement for patent eligibility finds little support in this Court's historical precedent," amici argue, and yet that is what the Federal Circuit relied upon in invalidating the claims below.

Finally, the brief argues that this case is "an excellent vehicle" for the Court's reconsideration and reassessment of the proper eligibility test for processes because it is directed to a diagnostic methods which are "critically important" to innovation and for consistency with the constitutional mandate that the patent laws "promote progress."  According to a USPTO report, the current state of patent eligibility "has a direct [(negative)] impact on investment, research, and innovation," citing A. Sasha Hoyt, The Impact of Uncertainty Regarding Patent Eligible Subject Matter for Investment in U.S. Medical Diagnostic Technologies, 79 Wash. & L. Rev. 397, 398 (2022).  These uncertainties are illustrated in the brief by citation of Federal Circuit decisions upholding or invalidating diagnostic method claims in different cases without any consistency, citing CardioNet, LLC v. InfoBionic, Inc., 955 F.3d 1358, 1367 (Fed. Cir. 2020); Exergen Corp. v. Kaz USA, Inc., 725 Fed. App'x 959, 966 (Fed. Cir. 2019); and Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1044 (Fed. Cir. 2016), that found eligibility versus Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302, 1319-20 (Fed. Cir. 2019); Roche Molecular Sys., Inc. v. CEPHEID, 905 F.3d 1363, 1381 (Fed. Cir. 2018); Cleveland Clinic Found. V. True Health Diagnostics LLC, 859 F.3d 1352, 1363 (Fed. Cir. 2017); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1381 (Fed. Cir. 2015), that did not.

Whether this brief prompts the Court to address patent subject matter eligibility or not, the arguments therein could motivate Congress to exercise its authority to mandate application of Section 100(b) consistent with the basis for enactment of the statute to overrule "judge-made" ineligibility for broad classes of inventions (i.e., new uses for old methods).  The Constitution gives Congress the power to grant patents (and to decide whether to have a patent system that does so), and so long as Congress does not exceed this authority the Court is subject to how Congress exercises this authority.  Whether Congress can muster the will or intestinal fortitude to do so is another matter.

Stanford Asks Supreme Court to Revisit Subject Matter Eligibility on Diagnostic Claims

By Kevin E. Noonan --

"Hope springs eternal [in the human breast]" (Alexander Pope) and "Insanity is doing the same thing over and over and expecting different results" (the latter attributed variably to Albert Einstein and Werner Erhart) are two aphorisms that irresistibly come to mind with the recent filing of a petition for certiorari by patentees in CareDX, Inc. v. Natera, Inc. and CareDx, Inc. v. Eurofins Viracor, Inc.

To recap, the case arose over CareDx's assertion of the claims in U.S. Patent Nos. 8,703,652, 9,845,497, and 10,329,607 directed to "methods to help predict the status or outcomes of transplant recipients through sequencing of cell-free nucleic acids ("cfDNA") found in the bodily fluids of a recipient."  The rationale behind the invention was that rejection of a transplanted organ in a recipient is accompanied by cell death, which releases donor-specific DNA into the recipient's bodily fluids.  Claim 1 of the '652 patent, claim 1 of the '497 patent, and claim 1 of the '607 patent were illustrative:

Claim 1 of the '652 patent recites:

1.  A method for detecting transplant rejection, graft dysfunction, or organ failure, the method comprising:
    (a) providing a sample comprising cell-free nucleic acids from a subject who has received a transplant from a donor;
    (b) obtaining a genotype of donor-specific polymorphisms or a genotype of subject-specific polymorphisms, or obtaining both a genotype of donor-specific polymorphisms and subject-specific polymorphisms, to establish a polymorphism profile for detecting donor cell-free nucleic acids, wherein at least one single nucleotide polymorphism (SNP) is homozygous for the subject if the genotype comprises subject-specific polymorphisms comprising SNPs;
    (c) multiplex sequencing of the cell-free nucleic acids in the sample followed by analysis of the sequencing results using the polymorphism profile to detect donor cell-free nucleic acids and subject cell-free nucleic acids; and
    (d) diagnosing, predicting, or monitoring a transplant status or outcome of the subject who has received the transplant by determining a quantity of the donor cell-free nucleic acids based on the detection of the donor cell-free nucleic acids and subject cell-free nucleic acids by the multiplexed sequencing,
    wherein an increase in the quantity of the donor cell-free nucleic acids over time is indicative of transplant rejection, graft dysfunction or organ failure, and wherein sensitivity of the method is greater than 56% compared to sensitivity of current surveillance methods for cardiac allograft vasculopathy (CAV).

Claim 1 of the '497 patent recites:

1.  A method of detecting donor-specific circulating cell-free nucleic acids in a solid organ transplant recipient, the method comprising:
    (a) genotyping a solid organ transplant donor to obtain a single nucleotide polymorphism (SNP) profile of the solid organ transplant donor;
    (b) genotyping a solid organ transplant recipient to obtain a SNP profile of the solid organ transplant recipient, wherein the solid organ transplant recipient is selected from the group consisting of: a kidney transplant, a heart transplant, a liver transplant, a pancreas transplant, a lung transplant, a skin transplant, and any combination thereof;
    (c) obtaining a biological sample from the solid organ transplant recipient after the solid organ transplant recipient has received the solid organ transplant from the solid organ transplant donor, wherein the biological sample is selected from the group consisting of blood, serum and plasma, and wherein the biological sample comprises circulating cell-free nucleic acids from the solid organ transplant; and
    (d) determining an amount of donor-specific circulating cell-free nucleic acids from the solid organ transplant in the biological sample by detecting a homozygous or a heterozygous SNP within the donor-specific circulating cell-free nucleic acids from the solid organ transplant in at least one assay,
    wherein the at least one assay comprises high-throughput sequencing or digital polymerase chain reaction (dPCR), and
    wherein the at least one assay detects the donor-specific circulating cell-free nucleic acids from the solid organ transplant when the donor-specific circulating cell-free nucleic acids make up at least 0.03% of the total circulating cell-free nucleic acids in the biological sample.

Claim 1 of the '607 patent recites:

1.  A method of quantifying kidney transplant-derived circulating [cfDNA] in a human kidney transplant recipient, said method comprising:
    (a) providing a plasma sample from said human kidney transplant recipient, wherein said human kidney transplant recipient has received a kidney transplant from a kidney transplant donor, wherein said plasma sample from said human kidney transplant recipient comprises kidney transplant-derived circulating [cfDNA] and human kidney transplant recipient-derived circulating [cfDNA];
    (b) extracting circulating [cfDNA] from said plasma sample from said human kidney transplant recipient in order to obtain extracted circulating [cfDNA], wherein said extracted circulating [cfDNA] comprises said kidney transplant-derived circulating [cfDNA] and human kidney transplant recipient-derived circulating [cfDNA];
    (c) performing a selective amplification of target [DNA] sequences, wherein said selective amplification of said target [DNA] sequences is of said extracted circulating [cfDNA], wherein said selective amplification of said target [DNA] sequences amplifies a plurality of genomic regions comprising at least 1,000 single nucleotide polymorphisms, wherein said at least 1,000 single nucleotide polymorphisms comprise homozygous single nucleotide polymorphisms, heterozygous single nucleotide polymorphisms, or both homozygous single nucleotide polymorphisms and heterozygous single nucleotide polymorphisms, and wherein said selective amplification of said target deoxyribonucleic acid sequences is by polymerase chain reaction (PCR);
    (d) performing a high throughput sequencing reaction, wherein said high throughput sequencing reaction comprises performing a sequencing-by-synthesis reaction on said selectively-amplified target [DNA] sequences from said extracted circulating [cfDNA], wherein said sequencing-by-synthesis reaction has a sequencing error rate of less than 1.5%;
    (e) providing sequences from said high throughput sequencing reaction, wherein said provided sequences from said high throughput sequencing reaction comprise said at least 1,000 single nucleotide polymorphisms; and
    (f) quantifying an amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient to obtain a quantified amount, wherein said quantifying said amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient comprises using markers distinguishable between said human kidney transplant recipient and said kidney transplant donor, wherein said markers distinguishable between said human kidney transplant recipient and said kidney transplant donor comprises single nucleotide polymorphisms selected from said at least 1,000 single nucleotide polymorphisms identified in said provided sequences from said high throughput sequencing reaction, and wherein said quantified amount of said kidney transplant-derived circulating [cfDNA] in said plasma sample from said human kidney transplant recipient comprises at least 0.03% of the total circulating [cfDNA] from said plasma sample from said human kidney transplant recipient.

The District Court granted Natera's motion for summary judgment that the claims were invalid under Section 101 for lack of subject matter eligibility (the petition noting that the District Court characterized the state of Section 101 law as being "fraught, incoherent, unclear, inconsistent, and confusing, and indeterminate and often leading to arbitrary results"), and the Federal Circuit affirmed.  The panel found that the claims failed the first prong of the Alice eligibility test for being directed to a natural phenomenon and failed the second prong of the test by reciting only conventional, well-understood, and routine methods that did not rise to the ineluctable "something more" required for eligibility.  The Federal Circuit relied upon disclosure in the specification that was similar to the disclosure that supported the Court's affirmance of ineligibility in Ariosa v Sequenom, specifically that the disclosed methods applied to detect cfDNA specific for the transplanted organ were conventional, the panel citing the following disclosure from the '652 patent in support of their conclusions:

• col. 9 ll. 8–14, which stated that "[d]etection, identification and/or quantitation of the donor-specific markers (e.g.[,] polymorphic markers such as SNPs) can be performed using real-time PCR, chips (e.g., SNP chips), high throughput shotgun sequencing of circulating nucleic acids (e.g.[,] [cfDNA]), as well as other methods known in the art");

• col. 10 ll. 11–12, which stated that, to obtain cfDNA samples, "any technique known in the art may be used, e.g. a syringe or other vacuum suction device");

• col. 13 ll. 51–53, which stated that step 2 of claimed methods can be performed "using existing genotyping platforms know[n] in the art");

• col. 15 ll. 6–8, which stated that techniques recited in step 2 of claimed methods "can be accomplished through classic Sanger sequencing methods which are well known in the art");

• col. 13 ll. 58–61, which stated that "[c]ompanies (such as Applied Biosystems, Inc.) currently offer both standard and custom designed TaqMan probe sets for SNP genotyping that can in principle target any desired SNP position for a PCR based assay");

• col. 20 ll. 31–34 (stating that genotyping recited in claimed methods "may be performed by any suitable method known in the art including those described herein such as sequencing, nucleic acid array or PCR");

• col. 15 ll. 22–65 (discussing commercial high throughput sequencing products);

• col. 14 ll. 58–67 (citing articles from 2006 and 2007 as supporting the statement that "digital PCR is a much more accurate and reliable method to quantitate nucleic acid species");

• col. 18 l. 55–col. 19 l. 2 (stating that "[m]ethods for quantifying nucleic acids," including high throughput genotyping, "are known in the art"); and

• col. 21 ll. 5–9 (stating that "[t]he presence or absence of one or more nucleic acids from the transplant donor in the transplant recipient may be determined by any suitable method known in the art including those described herein such as sequencing, nucleic acid arrays or PCR").

(Despite this litany, the petition faults the District Court for relying on a sole statement in the specification that "the methods 'employ[], unless otherwise indicated, conventional techniques'" and disregarding the qualifier "unless otherwise indicated" in assessing the purported conventionality of the disclosed detection methods.)  The opinion stated summarily that "[t]he claimed methods are indistinguishable from other diagnostic method claims the Supreme Court found ineligible in Mayo and that we found ineligible on multiple occasions," including Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019); Genetic Veterinary Scis., Inc. v. LABOKLIN GmbH & Co. KG, 933 F.3d 1302 (Fed. Cir. 2018); Roche Molecular Sys., Inc. v. Cepheid, 905 F.3d 1363 (Fed. Cir. 2018); Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352 (Fed. Cir. 2017); and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015).

The Federal Circuit's appreciation of the similarity to the Ariosa decision (which in some ways propelled the Court down this path of per se ineligibility) was express:

Here, as in Ariosa, the claims boil down to collecting a bodily sample, analyzing the cfDNA using conventional techniques, including PCR, identifying naturally occurring DNA from the donor organ, and then using the natural correlation between heightened cfDNA levels and transplant health to identify a potential rejection, none of which was inventive.  The claims here are equally as ineligible as those in Ariosa.

Petitioner CareDx and Stanford argue in their certiorari petition that the District Court and the Federal Circuit erred in this conclusion of conventionality to distinguish this case from the earlier precedent, and assert as analytical error in the Federal Circuit's application of the Supreme Court test under Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), and Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014), consideration of conventionality (and thus Section 103 issues) in the first prong of the Mayo/Alice test.

The focus of Petitioner's argument is that the invention is an improvement on prior art methods that were ineffective, and that it is this improvement as expressly recited in the statute ("or any new and useful improvement thereof") that supports eligibility.  According to this argument, this improvement distinguishes the invalidated claims from the natural phenomenon that cfDNA from a transplanted organ exist in a recipient's blood or that such cfDNA could be detected therein.  The petition sets forth the history of efforts to detect organ rejection in transplant patients, from "invasive and expensive tissue biopsies from the organ" to detecting increased evidence of cfDNA in patients undergoing organ rejection, including cfDNA specific for Y chromosomes or human leukocyte antigen (HLA) gene fragments, none of which were effective "after ten year of unsuccessful attempts" and all of which were admitted prior art in the common specification of the patents-in-suit.

The petition emphasizes the specific technical solutions of "high-throughput" and "multiplex" sequencing coupled with digital polymerase chain reaction technology using single nucleotide polymorphism detection to identify transplanted organ-specific cfDNA in recipient blood.  (These choices, the petition contends, are significant because the technologies were developed after the failed attempts by others and the targets, while not new, were not the targets used in earlier, failed attempts.  It should not escape the reader's attention that these considerations are also ones relevant to non-obviousness.)  The petition also notes that patentee disclaimed discovery of the natural phenomenon and preexisting methods for measuring it.

The petition's asserted reasons for the Court to grant certiorari frankly tell the Court that it "needs to take another Section 101 case" based on the Justices calling for the views of the Solicitor General five times in the past five years (citing Hikma Pharm. v. Vanda Pharm., Inc.; HP Inc. v. Berkheimer; Am. Axle & Mfg., Inc. v. Neapco Holdings LLC; and most recently in Tropp v. Travel Sentry, Inc. and Interactive Wearables, LLC v. Polar Electro Oy) and that the SG has counseled the Court that they should grant cert "in an appropriate Section 101 case."  This, according to the petition, is that case, even more so that Interactive Wearables or Tropp.  The reasons petitioner asserts in advocating for the Court to choose this case is that while it raises many of the same issues as in Tropp and Interactive Wearables, in this one "the problems are even worse."  Those cases are abstract-idea cases which, the petition argues "have not been the source of considerable controversy."  Not so application of the natural phenomenon eligibility exception in medical diagnostics claims, where the petition notes both the SG and the Federal Circuit have called for the Court's intervention (citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC; Am. Axle & Mfg., Inc. v. Neapco Holdings LLC; Interval Licensing LLC v. AOL, Inc.).  In those cases the circuit's judges have termed the subject matter eligibility question to be "baffling," leaving them "at a loss as to how to uniformly apply § 101," that it is "near impossible to know with any certainty whether [an] invention is or is not patent eligible," and that this situation "ha[s had] a serious effect on the innovation incentive in all fields of technology."  Similar sentiments from district courts and the U.S. Patent and Trademark Office and former Directors of the agency are cited in support of this argument.  The objective evidence for this state of affairs is the Federal Circuit's track record, wherein that Court has invalidated "every single diagnostic method patent it has encountered since Mayo[]."  Moreover, the petition notes that the cumulative effect of the Federal Circuit's jurisprudence on subject matter eligibility for medical diagnostics claims is that these claims are virtually per se ineligible (including citations to Cleveland Clinic Found. v. True Health Diagnostics LLC and Roche Molecular Sys., Inc. v. CEPHEID along with those cases cited earlier in the petition).  These decisions have "powerfully undercut[] the incentive to innovate and invest in life-saving medical diagnostics" consequently.

In addition, the petition argues that this case is one where the claimed invention was "on specific improved methods for measuring the relative proportion of the donor's DNA [that] ensures the absence of any preemption concerns" because "[p]atents that claim specific improvements upon preexisting processes for applying a previously known natural phenomenon cannot monopolize the underlying phenomenon itself, because other methods already exist to apply it and thus remain outside the scope of the patent."  These circumstances, the petition states, provide the Court with an opportunity to "reinvigorate the role of Section 101's statutory text in a manner consonant with the preemption concerns that animate this Court's precedents."  The petition notes in support for this argument that the Court has not considered the application of Section 101 to such improvements "upon a preexisting useful process" and that this case provides such an opportunity.  The petition cites the Court's decision in Tilghman v. Proctor, 102 U.S. 707 (1880), as being consistent with these arguments by being "a particular mode of bringing about [a] desired result" (and perhaps being a basis for the Court to be persuaded by them).  And petitioners emphasize that claims to such an improvement do not claim either a natural phenomenon nor preexisting methods which are expressly in the prior art.

Finally, the way the District Court and Federal Circuit considered issues of "conventionality" for both the first and second prongs of the Mayo/Alice test (the petition argues) was error needing Supreme Court correction.  Concerns over the (im)proper application of conventionality in the Mayo/Alice test was voiced by the Solicitor General in Interactive Wearables with regard to Step 2 but is arguably more erroneous here according to the petition, where the lower courts relied on conventionality in both Step 1 and Step 2 (the Federal Circuit going so far as to state that it had "repeatedly analyzed conventionality at step one," citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC and Universal Secure Registry LLC v. Apple Inc. in support of this practice).  (This argument has greater force than the corresponding argument regarding Step 2, where considerations of conventionality go hand in hand with the Supreme Court's instruction for courts to search for an "inventive concept," although the petition bravely argues that such conflation of Section 103 issues in a Section 101 determination is equally improper.)  The petition contends that the Federal Circuit's practice in this regard "collapses the entire Section 101 inquiry into 'a search for an inventive concept'" and "effectively conflat[es] Section 101 with the statutory requirements of novelty, 35 U.S.C. 102, nonobviousness, 35 U.S.C. 103, and enablement, 35 U.S.C. 112" (which while a persuasive argument for much of the patent bar may be less so for the Court, which has tended in earlier decisions to consider patent law with much less granularity; see Mayo).  And petitioners assert that in doing so the Federal Circuit "circumvented important protections guaranteed by this Court's obviousness precedents under Section 103," citing Graham v. John Deere and KSR Int'l Co. v. Teleflex Inc.  The petition characterizes the invention at issue here as being closer to an application of a law of nature as sanctioned by the Court's decision in Diamond v. Diehr than the invention in Mayo and notes that the Court held in Ass'n for Molecular Pathology v. Myriad Genetics, Inc. that "new applications of knowledge about" natural phenomena are patent-eligible.

Finally, the petition asks the Court "at a minimum" to hold the case until the Court has decided the outcome of the Interactive Wearables and Tropp cases.

The arguments in the petition thus thread a very narrow needle in giving the Court a reason to grant certiorari and emphasize (as has been emphasized before) the need to do so.  Earlier in the petition the Court's attention is directed albeit somewhat obliquely to the "heav[y] investment CareDx made in bringing this technology to market" and the frankly infringing behavior of both Natera and Eurofin in bringing their own "copycat" products to market.  Those hoping for a certiorari grant (and positive outcome) have reason for such hopes if the Court is listening to these circumstances and the importance and negative consequences to innovation in the medical diagnostic arts that the lower courts' interpretations of their subject matter eligibility jurisprudence has produced over the past decade.

Sequoia Technology LLC v. Dell Inc. (Fed. Cir. 2023)

By Michael Borella --

The patent statute requires that, to be patentable, the subject matter of an invention must be at least one of a process, machine, article of manufacture, or composition of matter.  It is hard to find examples of things that do not fall into these broad categories, though signals in motion and data at rest are two.  The former has been well-litigated at this point and it is accepted that various forms of computer-readable medium (CRM) claims must recite that the medium is non-transitory.  Consider the 2007 Federal Circuit decision of In re Nuijten as the standard bearer in this regard.

Nonetheless, disputes over the interpretation of CRM language do pop up from time to time, as was the situation in this case.

Sequoia asserted U.S. Patent No. 6,718,436 against Dell and several other companies (most notably, Red Hat, which is a subsidiary of IBM) in the District of Delaware.  The parties butted heads over claim construction issues in district court with Sequoia coming up on the losing end.  Thus, they stipulated non-infringement under this construction.  The District Court also found that claims 8-10 were ineligible under § 101 due to construction of the term "computer-readable recording medium" to include transitory media.  Sequoia appealed.

Claim 8 of the '436 patent reads:

8.    A computer-readable recording medium storing instructions for executing a method for managing a logical volume in order to support dynamic online resizing and minimizing a size of metadata, said method comprising the steps of:
    a) creating the logical volume by gathering disk partitions in response to a request for creating the logical volume in a physical storage space;
    b) generating the metadata including information of the logical volume and the disk partitions forming the logical volume and storing it the metadata to the disk partitions forming the logical volume;
    c) dynamically resizing the logical volume in response to a request for resizing, and modifying the metadata on the disk partitions forming the logical volume; and
    d) calculating and returning a physical address corresponding to a logical address of the logical volume by using mapping information of the metadata containing information of the physical address corresponding to the logical address;
    wherein the metadata includes,
        a disk partition table containing information of a disk partition in which the metadata is stored;
        a logical volume table for maintaining the information of the logical volume by storing duplicated information of the logical volume onto all disk partitions of the logical volume;
        an extent allocation table for indicating whether each extent in the disk partition is used or not used; and
        a mapping table for maintaining a mapping information for a physical address space corresponding to a logical address space which is a continuous address space equal in size of storage space to an entirety of said logical volume.

As noted, the main part of the § 101 dispute was over the interpretation of the term "computer-readable recording medium."  The Federal Circuit immediately noted that this term explicitly recites a "recording medium storing instructions" and that "a person of ordinary skill would not understand transitory signals, such as carrier waves, to record or store instructions in memory systems."  This understanding is supported by other claim elements, such as "creating the logical volume in a physical storage space" and "storing [sic] the metadata to the disk partitions forming the logical volume."  All of this establishes that the computer-readable recording medium of claim 8 does not encompass non-persistent or transient storage.

The Court found further support for its position in the specification.  Particularly, the specification provides several examples of hardware-only computer-readable media including RAM, CDROM, and various types of disk drives.

One of the defendants, Red Hat, argued that the specification does not exclude transitory media.  But the Court pushed back, noting that the claim itself recites a "storage medium" and that Red Hat's proposed interpretation would contradict the teachings of the specification and render the invention inoperable.

The Court also found that Red Hat's expert's testimony was "inconsistent with the intrinsic evidence and also based on different express definitions of CRM in patent specifications directed to different inventions."  Notably, the expert looked to 34 other patent applications to help define the claim term.  The Court was not amused:

This evidence merely shows that in thirty-four other specifications, the inventors chose to be their own lexicographers and expressly defined CRM or like terms to include transitory media.  The inventors here chose otherwise.  That other inventors chose to be their own lexicographers and define CRM to include transitory signals does not demonstrate what CRM means in the context of the '436 patent.  Nor does it establish the plain and ordinary meaning of the claim term "computer-readable recording medium for storing."

In a similar manner, Red Hat also relied on the Court's decision in Mentor Graphics Corp. v. EVE-USA, Inc., where the Court found that a claimed "computer readable medium" included transitory signals.  But this conclusion was based on that specification expressly including carrier waves in its definition of the term.  Accordingly, the Court found that how a term is defined other patents and applications cannot be used to contradict how it is defined in the specification at hand.  Specifically, the Court wrote "[s]imply put, extrinsic evidence of what other inventors chose to do cannot surmount the intrinsic evidence of what the inventors chose here; context is key in claim construction."  Thus, the Court discounted the testimony of Red Hat's expert and the relevance of these extrinsic documents.

Finally, Red Hat pointed to the USPTO's 2010 memo on computer-readable medium claims, alleging that it establishes that the term in question should be interpreted broadly enough to include transitory media.  But, as the Court pointed out, this memo merely states that the broadest reasonable interpretation of a claim during prosecution may result in claims being interpreted to cover transitory media.  However, this does not provide the plain and ordinary meaning of the term to be used in litigation, nor does it mean that there is a presumption that claim 8 reads on transitory media.

Given all of this, the Court concluded that the District Court erred, and reversed the finding of invalidity under § 101.

A practice note from all of this is that you should explicitly recite in your CRM claims language that clearly establishes that the CRM is non-transitory.  This does not need to be the exact words "non-transitory" but however your language is defined in the specification should make that point clear and unambiguous.

Unlike the claimed invention, this victory for Sequoia turned out to be transitory -- it lost on other claim construction issues and the Court ultimately affirmed the determination of non-infringement.

Sequoia Technology LLC v. Dell Inc. (Fed. Cir. 2023)
Panel: Circuit Judges Lourie, Dyk, and Stoll
Opinion by Circuit Judge Stoll

On Alice Rejections per USPTO Technical Center

By Michael Borella --

The U.S. Patent and Trademark Office (USPTO) organizes its examining corps into technical centers (TCs).  Each TC is dedicated to one or more general technical fields.  In some cases, one TC may include two or more unrelated fields, while some fields (software, for example) are represented in multiple TCs.  Currently there are nine TCs, not counting one dedicated to reissues.

Each TC is further subdivided into art units (usually 4-10) and examiners are assigned to these art units.  Thus, examiners tend to focus their efforts on examining patent applications within a fairly narrow field.

Over the nine years since 2014's Alice Corp. v. CLS Bank Int'l Supreme Court case, the number of 35 U.S.C. § 101 rejections has dramatically increased throughout the USPTO.  Anecdotally, however, many practitioners believe that certain TCs are much more likely to result in 101 rejections than others.  In practice, it is generally accepted that TC 3600 -- the TC to where most business-related inventions are routed -- issues the most Alice-based 101 rejections.

We tested this hypothesis by gathering data on Alice rejections per TC from 2020.  We had to look back this far due to the USPTO's 18-month publication delay causing not all relevant data from 2021 to be available.  Here, an Alice rejection is a rejection of at least one claim on the grounds of the claim(s) not meeting the judicial patent eligibility requirements of Alice.  This is a slightly narrower scope than § 101 rejections in general, which include claims rejected on grounds of failing to meet the statutory requirements and grounds of double patenting.

While the raw numbers of Alice rejections per TC in 2020 were not hard to obtain, they were also not very insightful when considered in isolation.  To be able to compare Alice rates across TCs, we also collected a count of § 103 rejections per TC in 2020.  By considering the ratio of § 103 rejections to Alice rejections, we are able to obtain a clearer understanding of how "difficult" each TC is with respect to § 101.  Particularly, using § 103 rejections (which are quite common) as a baseline, we can get a clear understanding of how many Alice rejections to expect per § 103 rejection.

As shown above, the ratio of § 103 to Alice rejections varies wildly across the TCs.  For instance, in TC 1600, you can expect one Alice rejection for about every fifteen § 103 rejections.  On the other hand, in TC 3600, you can expect one Alice rejection for about every three § 103 rejections.  Indeed, TC 3600 has the highest likelihood of an Alice rejection by far when compared to § 103 rejection volume.  This appears to confirm our anecdotal observations.

Other TCs that have relatively high rates of Alice rejections are 1600 and 2100.  Both of these TCs receive a high volume of software applications.  In contrast, TCs 1700, 2600, and 2800 have the lowest rates, with 1700 being quite low.

Based on experience, we expected a higher rate of Alice rejections in TC 3700.  In particular, gaming inventions get routed to this TC, and we have seen frequent Alice rejections for their applications.  This TC, however, also examines mechanical and medical inventions, which typically are not subject to § 101 challenges as often.  Thus, across TC 3700 as a whole, Alice rates fall about in the middle of the field.  This suggests that it might be informative to further break this data down by art unit in a follow-on exercise.

A word of caution -- while this data suggests that TC is highly influential on whether an application is going to receive a § 101 rejection, there are other factors.  By their very nature, some inventions (e.g., business methods, data processing) are more prone to a § 101 rejection than others (e.g., mechanical devices, chemical compounds).  Inventions with a high likelihood of triggering an Alice analysis may receive a § 101 rejection regardless of its TC.

Still, if a goal is to avoid TCs with higher Alice rates, this data provides a compelling view of just how much each TC relies on Alice rejections when compared to § 103 rejections.  As such, TC prediction and steering tools can be advantageous when used in conjunction with the numbers above.