Patent Docs

Realtime Adaptive Streaming LLC v. Netflix, Inc. (Fed. Cir. 2022)

By Michael Borella --

Bad law often gives rise to creative legal arguments.  But the application of such creative lawyering is necessarily bounded by ethical rules and notions of fair dealing.  Patent eligibility, in its current incarnation, has been argued to be bad law by many.  The current judicial interpretation of 35 U.S.C. § 101 is at best vague and at worst a subjective inquiry in which the proclivities of the reviewer (whether patent examiner, administrative judge, or federal judge) often matter as much or more than the claims under review.  Such a situation is inexcusable, but still does not give a party license to engage in monkey business.

Case in point, Realtime asserted six patents against Netflix in the District of Delaware.  Netflix responded by filing seven petitions for inter partes review (IPR) of these patents, and moving to dismiss four of the patents from the Delaware proceeding on grounds of ineligibility under § 101.  All seven IPRs were instituted and a magistrate judge in Delaware recommended that Neflix's motion be granted.

But before the District Court judge could rule on the magistrate judge's eligibility report, Realtime voluntarily dismissed the Delaware case.  The next day, Realtime filed suit in the Central District of California asserting all six patents against Netflix again.  Realtime did this "despite having previously informed the Delaware court that transferring the Delaware action across the country to the Northern District of California would be inconvenient and an unfair burden on Realtime."  The California court had previously found some of Reatime's claims to be patent-eligible.

Netflix moved to transfer the new assertions back to Delaware and also requested attorney's fees for the California and Delaware cases, as well as the IPRs.  Again, Realtime voluntarily dismissed the case before the California judge had a chance to rule on the transfer.  Nonetheless, the judge had seen enough and awarded attorney's fees to Netflix for the California cases based on equitable considerations.  The judge did not, however, award attorney's fees for the Delaware cases or the IPRs.  Both parties cross-appealed to the Federal Circuit.

On review, that Court quickly concluded that the California court "reasonably found Realtime's conduct in the California actions 'improper,' 'exceptional,' and 'totally unjustified.'"  Given that the Delaware court was likely to rule against Realtime on the § 101 motions and that the California court was a more favorable forum for such issues, the Court found that "Realtime undoubtedly realized that by refiling in California, it could effectively erase the Delaware magistrate judge's fulsome and compelling patent-ineligibility analysis and findings."

The Court was further convinced by Realtime's behavior when it "resisted transfer back to the forum it originally chose."  Thus it affirmed the California court's finding that Realtime engaged in "impermissible forum shopping."

Combined, this was enough for the Federal Circuit to agree that Realtime acted in bad faith and that these acts were "sanctionable under a court's inherent power in view of the Ninth Circuit's standard."  Accordingly, "the district court did not abuse its discretion in awarding fees pursuant to its inherent equitable powers."

Moving on to Netflix's request for attorney's fees from the Delaware proceeding and the IPRs, the Federal Circuit agreed with the California court that there was no evidence of bad faith in the initial filing of the Delaware action.  Further, institution of the IPRs was insufficient to make Realtime's ongoing litigation efforts futile.  Thus, the Federal Circuit declined to reverse the California court with respect to the Delaware action and the IPR.

In sum, patent-eligibility is a mess.  But that still does not give one a second bite at the apple or support taking contrary positions at different points in litigation.  There is no reset button to press after an adverse ruling, just the appeals process.  Realtime should have known better and it paid the price.

Realtime Adaptive Streaming LLC v. Netflix, Inc. (Fed. Cir. 2022)
Panel: Circuit Judges Newman, Reyna, and Chen
Opinion by Circuit Judge Chen; opinion concurring-in-part and dissenting-in-part by Circuit Judge Reyna

USPTO Director's Blog Post Extolling Certainty in § 101 Determinations Paradoxically Increases Uncertainty

By Kevin E. Noonan --

Kathi Vidal, Under Secretary of Commerce for Intellectual Property and Director of the U.S. Patent and Trademark Office (at right) released a blog post on the USPTO's Director's Blog on Monday addressing the fraught subject of subject matter eligibility under 35 U.S.C. § 101 as interpreted over the past decade by the U.S. Supreme Court and implemented by the Office in light of those decisions.

As with much of Director's public pronouncements the tone of the post is mostly upbeat, extoling the Office's efforts in accommodating sometimes confusing if not contradictory instructions from the courts (particularly the Federal Circuit, which is somewhat understandable in view of the occasionally Delphic language on the issue by the High Court).  Director Vidal references the Office's 2022 report to Congress on "Patent eligible subject matter: Public views on the current jurisprudence in the United States" and the message therein that "across the spectrum, stakeholders generally agreed that the law on patent eligibility—like other areas of patent law—needs to be clear, predictable, and consistently applied."  The Director also recites innovation canon in saying that "[t]his clarity and consistency will allow innovators to attract the investment and collaborations that bring more innovation to impact, in turn creating more jobs and solving world problems."

While the sentiments voiced by the Director are admirable (and it would be hard for her to be credible if she didn't subscribe to them) the devil in this instance is not just in the details but in the process of effectuating eligibility determinations within the strictures of recent case law.  To this end, the post mentions the Deferred Subject Matter Eligibility Response (DSMER) pilot program (crediting the impetus for this initiative to Senators Thom Tillis (R-NC) and Tom Cotton (R-AK)) and describing the program as being "designed to evaluate whether examination efficiency and patent quality can be improved by delaying the complete evaluation of subject matter eligibility until other patentability criteria are evaluated as opposed to addressing all requirements for patentability at the same time" and reminding stakeholders that it will expire on July 30, 2022 although patent applications involved in the program will persist during the course of their prosecution.  Regarding its adoption, the Director's statistics state that about one-third of the 600 invitations the Office has sent have been accepted, the Director drawing no conclusions nor making any statements regarding whether this frequency was expected or consistent with the Office being able to draw any conclusions regarding its effectiveness.

Next the Director notes the series of Guidances, including the 2019 Revised Patent Subject Matter Eligibility Guidance, the October 2019 Patent Eligibility Guidance Update, and the Berkheimer Memo, all of which can be found in Section 2106 of the latest version of the Manual of Patent Examining Procedure.  In association with these assertions, the Director provides the encouraging statistic that "the corps-wide eligibility rejection rate [has dropped] from about 25% in 2018 to about 8% today," although it is certainly likely that at least a portion of this improvement is due to applicants adapting to PTO and Federal Circuit standards that have evolved since the Supreme Court began its subject matter eligibility crusade in 2012 with its decision in Mayo Collaborative Services v. Prometheus Laboratories.  The Director also references the Office's October 2020 Report on "Public Views on Artificial Intelligence and Intellectual Property Policy" and its "Adjusting to Alice" report on patent examination outcomes released in April 2020.  These Reports support the conclusions of the Chief Economist that the 2019 revisions to the Office's eligibility guidance produced a 25% decrease in the frequency of Alice-affected technologies to receive a first Office Action asserting a Section 101 rejection, and that "uncertainty about determinations of patent subject matter eligibility for the relevant technologies decreased by a remarkable 44% as compared to the previous year."

This is all well and good as far as it goes, the Director giving credit to prior Directors, administrators, and the examining corps in reducing somewhat the uncertainties caused by judicially created changes in subject matter eligibility law.  But the next sentences undo much of the good feelings produced by these achievements, the Director stating "[d]espite this progress to achieve a more consistent examination under Section 101, there is more work to be done.  Accordingly, we are revisiting our subject matter eligibility guidance."  To this end, the Director asks the public to provide comments on subject matter eligibility by September 15, 2022 to [email protected] and by participating in stakeholder listening sessions.  While it is certainly the case that subject matter eligibility law remains unsettled, to once again poll stakeholders seems a fool's errand (besides being completely redundant).  It is well-established that there are two generic species of applicant:  those who believe that the status quo is optimal for them and their business goals and are thus completely satisfied, and those who have been negatively affected by frank preclusion of certain innovative technologies (medical diagnostics being a principal example) and thus are completely dissatisfied (and have been forced to use trade secret and other means to protect their technologies, albeit imperfectly).  It is hard to see how another round of these efforts will be more successful than the ones that inauguration of this latest iteration indicates have been inadequate.

Some rays of hope may be found in the concluding statements in the blog post, regarding efforts to consult with counterpart offices in foreign countries, with regard to how those countries have largely avoided the confusion that has arisen in the U.S. (although it is likely that the simple reason for the clarity existing abroad on subject matter eligibility is due entirely to the absence of a Supreme Court in those countries that is involved in making patent policy).  To the extent that foreign counterparts can raise any issues current U.S. law or the interpretation thereof on subject matter eligibility that runs afoul of international obligations under the TRIPS agreement such discussions may be helpful.  The blog also notes cooperation between the PTO and the DOJ Solicitor General regarding efforts towards identifying "good vehicles" to achieve the goal of "creating more certain and predictable rights that foster innovation."

The simple fact is that the Supreme Court has shown no recognition that its subject matter eligibility jurisprudence needs to be revisited (even when encouraged to do so by the Solicitor General as in the American Axle case), the Federal Circuit has been unwilling to provide a useful counterbalance to the Court's dicta regarding eligibility, and the PTO does not have the authority under the law to bind judicial decision-making.  Congress is the answer, as frightening as that reality may be in the current political climate, and despite some efforts has not been able to enact legislation that would improve matters.  For the moment, only by taking up Justice Breyer's challenge to the clever draftsman (see "Mayo Collaborative Services v. Prometheus Laboratories -- What Should We Do? (or Can These Claims Be Saved?)") to craft claims sufficient to provide the maximum possible protection with the least risk of invalidation can the situation be ameliorated if not entirely remedied.

CareDx, Inc. v. Natera, Inc. (Fed. Cir. 2022)

Plus ça change, plus c'est la même chose

By Kevin E. Noonan --

Judge Moore, in Athena Diagnostics, Inc. v. Mayo Collaborative Services, LLC stated the obvious when she said in her dissent:

My colleagues' refusal deflates the Amici's hopeful suggestion that our precedent leaves the eligibility of a diagnostic claim in front of the Federal Circuit "uncertain."  It is no longer uncertain.  Since Mayo, every diagnostic claim to come before this court has been held ineligible.  While we believe that such claims should be eligible for patent protection, the majority of this court has definitively concluded that the Supreme Court prevents us from so holding.  No need to waste resources with additional en banc requests.

In the interim it has become clear that even asking the Court to provide any answer other than an affirmance of a district court decision below invalidating claims to diagnostic methods is too much to ask, a reality made evident once again by the Court's recent decision in CareDx, Inc. v. Natera, Inc.

To recap proceedings below, the case arose over 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 is 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 Magistrate Judge resolved the issue of whether these claims were ineligible for patenting under 35 U.S.C. § 101 under the first step of the Supreme Court's test enunciated in Mayo and Alice Corp. v. CLS Bank Int'l.  Defendants argued (as they must) that the claims in the patents-in-suit were directed to one of the judicial exceptions (a natural phenomenon, specifically "the correlation between transplant rejection and the presence of naturally occurring [cfDNA] in the bodily fluids of transplant recipients").  The Magistrate, relying on Federal Circuit precedent permitting a court to consider the patent specification in determining "what a patent claim is really directed to at step one [of the Mayo/Alice test]" (Enfish LLC v. Microsoft Corp.) found that:

[T]he patents' [related] specification repeatedly and consistently states that this basic "correlation" between the presence of increased levels of donor-specific cfDNA and transplant rejection . . . -- i.e., the thing that, according to Defendants, the asserted claims were purportedly "directed to" -- had already been well-known in the art for quite a long time.

The District Court, while granting parties the opportunity for discovery and expert testimony, ultimately granted Natera's motion for summary judgment that the claims were invalid under Section 101 for lack of subject matter eligibility, and this appeal followed.

The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judges Bryson and Hughes.  The reasoning is depressingly predictable:  that the claims fail the first prong of the Alice eligibility test for being directed to a natural phenomenon and fail 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.  In this, patentees fell into the trap that was sprung on unwary applicants ever since Ariosa v Sequenom.  As in that case, the particular petard upon which patentees' eligibility hopes were hoisted was disclosure in the specification regarding this conventionality, the opinion setting out in a footnote in detail the extent of what the Court found was an admission:

See, e.g., '652 patent at col. 9 ll. 8–14 (stating 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"); id. at col. 10 ll. 11–12 (stating that, to obtain cfDNA samples, "any technique known in the art may be used, e.g. a syringe or other vacuum suction device"); id. at col. 13 ll. 51–53 (stating that step 2 of claimed methods can be performed "using existing genotyping platforms know[n] in the art"); id. at col. 15 ll. 6–8 (stating that techniques recited in step 2 of claimed methods "can be accomplished through classic Sanger sequencing methods which are well known in the art"); id. at col. 13 ll. 58–61 (stating 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"); id. at 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"); id. at col. 15 ll. 22–65 (discussing commercial high throughput sequencing products); id. at 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"); id. at 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"); id. at 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").

The opinion states 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."  Natera recites and the panel agrees with the familiar litany of cases coming to the same conclusion, i.e., 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); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015).  The similarity to the Ariosa decision (which in some ways propelled the Court down this path of per se ineligibility) is 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.

To the extent there is anything remotely new in this opinion it is the acknowledgement that conventionality is an element of step one of the Alice eligibility test, citing Athena and Cleveland Clinic decisions for the principle.

With regard to that conventionality, the opinion illuminates the logical error of its treatment of this part of the equation.  The opinion asserts that the methods are conventional because "CareDx does not actually claim any improvements in laboratory techniques—rather, as previously discussed, the actual claims of the patent merely recite the conventional use of existing techniques to detect naturally occurring cfDNA.  Furthermore, the specification admits that the laboratory techniques disclosed in the claims require only conventional techniques and off-the-shelf technology" and "the asserted claims add nothing inventive because they merely recite standard, well-known techniques in a logical combination to detect natural phenomena."  The case also contains a convenient mantra for this rationale:  "We have repeatedly held that applying standard techniques in a standard way to observe natural phenomena does not provide an inventive concept," citing Ariosa, Athena, and Roche.  According to the Court, a conclusion of ineligibility is justified because the claimed combination of steps adds nothing inventive, analogous to the factual circumstances in Mayo v. Prometheus.

But what the Court has consistently ignored is the difference between the claims in Mayo and the ones in Ariosa and the Court's other diagnostic method cases.  And that difference is that the detection methods reciting in the Prometheus claims were conventional because they were actually being performed in the art on the subject matter and for the purpose (assessing the amount of drug in a patient's blood after administration) recited in the claims.  The only distinction from these conventional methods in those claims was the recognition that there were boundary levels of detected drug concentrations that indicated whether the dosage should be increased or decreased.  In contrast, in all the diagnostic method cases that have fallen under the Court's ineligibility ax since Mayo there had not been any recognition, much less practice, in the prior art of these methods on this subject matter to detect the natural phenomenon that has been used to satisfy step one of the Alice test.  The inventiveness resides there, and refusal to recognize that distinction is the principal reason for the Court's continuing invalidity jurisprudence.

In her dissent in Athena, Judge O'Malley noted that:

Since Mayo, every diagnostic claim to come before this court has been held ineligible.  While we believe that such claims should be eligible for patent protection, the majority of this court has definitively concluded that the Supreme Court prevents us from so holding.  No need to waste resources with additional en banc requests.  Your only hope lies with the Supreme Court or Congress.  I hope that they recognize the importance of these technologies, the benefits to society, and the market incentives for American business.  And, oh yes, that the statute clearly permits the eligibility of such inventions and that no judicially-created exception should have such a vast embrace.  It is neither a good idea, nor warranted by the statute.

In view of the Supreme Court's denial of certiorari in American Axle v. Neapco it appears Congress (other than reliance on trade secret protection) remains the only source of any respite from the scourge of ineligibility for diagnostic methods claims.

CareDx, Inc. v. Natera, Inc. (Fed. Cir. 2022)
Panel: Circuit Judges Lourie, Bryson, and Hughes
Opinion by Circuit Judge Lourie

The Supreme Court Sidesteps America's Patent Eligibility Crisis

By Michael Borella --

In an order that is clearly less impactful and damaging than a number of opinions that the Supreme Court has disgorged in the last two weeks, the justices have denied certiorari in American Axle & Mfg. Inc. v. Neapco Holdings LLC.  To many, American Axle represented the Gordian Knot in patent-eligibility that had been unartfully tied by the Court with help from the Federal Circuit.  The case was possibly the best opportunity yet to clarify what was meant by the remarkably vague two-part test set forth in Alice Corp. v. CLS Bank Int'l.

Complaints about the opaque and harmful nature of Alice began shortly after it was issued, and have continued for the eight years since.  Notably, criticisms did not just come from patent attorneys and patentees -- federal judges, sitting U.S. senators, and law professors have also spoken up against the opinion and its erratic interpretation by the federal courts and the USPTO.  Former Chief Judge Paul Michel of the Federal Circuit summed the situation up by stating that Alice "created a standard that is too vague, too subjective, too unpredictable and impossible to administer in a coherent consistent way in the patent office or in the district courts or even in the federal circuit."

The current state of patent-eligibility under 35 U.S.C. § 101 has deviated far afield from the plain language of the statute and even from the less plain language of Alice.  The Federal Circuit has interpreted the eligibility test to require consideration of the daylight between the claimed invention and the prior art, as well as whether the claims sufficiently recite how to practice the invention with enough specificity.  These notions were formerly the exclusive domain of other sections of Title 35 -- but no longer.  And the Court is apparently okay with the current state of affairs despite these affairs violating principles of statutory interpretation.

As a result, garage door openers, electric vehicle charging stations, and mobile phones -- inventions that should pass the § 101 inquiry with flying colors -- are now too abstract for patenting.  In practice, this means that it can be immensely difficult for an inventor, a business, a patent attorney, a patent examiner, or even a judge to predict whether an invention is viable.  The validity of certain types of claims, those involving software in particular, are perpetually in an indeterminate state until examined in the USPTO or challenged post-issuance.

Some of us were hoping that the Court might take up American Axle so patent law no longer had to share a box with Schrodinger's Cat.  But now it looks like that will not happen, possibly for a long time.  Fixing Alice has proven remarkably difficult despite its obvious problems.  Congress tried three years ago and gave up.  The USPTO tried to clarify the Alice test through examination guidance but only made it more complicated.

The vagaries of patent eligibility produce clear winners and losers.  The economics favor patentees with deep pockets who can persist through multiple rounds of examination and litigation.  These large companies can file hundreds of patents per year, with the understanding that even losing 10-20% to Alice is just a cost of doing business.  Individual inventors and startups are budget-constrained, often having to bet the farm on a single patent application.  All it takes is an unreasonable patent examiner at the USPTO to make obtaining protection virtually impossible.

Viewed this way, there is a throughline in the Court's recent rulings -- protecting the interests of the powerful over those of the weak.  This misguided consistency is harmful in general and not what drives an economy that is more and more based on innovation and intangible assets.

In any event, given that we are where we are and that the current state of § 101 is unlikely to change, what can we do?  Are there any best practices to put into place now that the Court has declined to revisit Alice?  In short, yes, there are a few things that a patentee can do to insulate themselves.

The easiest way to deal with Alice is to not deal with Alice.  Thus, you should consider the nature of the invention when making the decision of whether to file.  If the invention is not sufficiently technical in nature (where technical inventions improve the operation of machines rather than that of businesses or people) or if the invention is not thoroughly fleshed out, it might not be the best candidate for a patent application.  But if the invention is technical and understood in detail, this technical character and such details should be discretely called out in the specification and recited by the claims, as should the differences between the invention and the prior art.  It has been established that the courts look for these three factors (technicality, specificity, and novelty) in both parts of the § 101 analysis.

For pending applications under examination, you have to work with what you have.  You cannot modify the specification, but you can amend the claims.  By placing specific, technical features that distinguish over the prior art in the claims (assuming that such features are supported by the specification), you can move the odds in your favor.

When determining whether to assert a granted patent, the same calculus is involved.  If the claims recite a specific, technical advance over the prior art, then they are in reasonably good shape to survive an eligibility challenge in court.  If not, you may have an uphill battle.

While these factors are not 100% determinative, they are the best guideposts for navigating the Alice labyrinth.  At this point, we have to assume that the Court and Congress are unlikely to reassess patent eligibility for years.  And given the well-placed lack of faith in these institutions, it is not out of the question that such a reassessment could result in a framework that is even worse than the mess we are stuck with today.

Supreme Court Denies Cert in American Axle

By Kevin E. Noonan --

In a month where the Supreme Court's conservative majority has exercised its judicial muscle by striking down several well-established precedents, one portion of their jurisprudence is as fixed a constant as the North Star:  the Court will not address the morass in patent subject matter eligibility created by the decisions in Bilski, Mayo, Alice, and Myriad, and once again refused to do so in American Axle & Mfg. Inc v. Neapco Holdings LLC.  For a Court whose political inclinations are evident and frequently commented upon, the chorus of dissent regarding the state of subject matter eligibility law from the patent community, industry groups, the U.S. Patent and Trademark Office, members of Congress, half (at last count) of the judges on the Federal Circuit, and the Solicitor General has fallen on particularly deaf ears, this refusal being the latest (along with denial of certiorari today in another, less celebrated subject matter eligibility case, Spireon, Inc. v. Procon Analytics, Inc.) in an increasingly long line.

Perhaps this is a blessing in disguise, however, because it is possible that the Court recognizes its decisions have backed the Justices into a rhetorical corner (albeit a Minoan labyrinth may be a better analogy) from which there is no doctrinally straightforward way out.  Alternatively, the Court may believe that the district courts and Federal Circuit have more work to do in clarifying (or muddying) subject matter eligibility law before they will revisit the question.  They may be waiting for Congress to step forward, believing that whatever else their decisions have done they have illuminated the divide between stakeholders who need certainty in the law, such as biotechnology and pharmaceutical companies whose products are sufficiently costly that uncertainties in return on investment threaten to impair innovation, and other companies who would rather more readily be able to "efficiently infringe."  Or perhaps it's as simple as the Court, like Professor Quincy Adams Wagstaff in Horse Feathers, having decided that "whatever it is, I'm against it."

The parlous state of Section 101 remains uncorrected.

District Court Rules PureCircle Steviol Glycoside Patents Invalid

By Kevin E. Noonan --

On May 23rd, U.S. District Court Judge James V. Selna of the Central District of California granted summary judgement to Defendant Sweegen, Inc. on its motion that Plaintiff Pure Circle USA Inc.'s claims in suit were invalid for reciting patent ineligible subject matter and for failing to satisfy the written description and enablement requirements of 35 U.S.C. § 112(a), in PureCircle USA Inc. v. SweeGen, Inc.  Neither judgment was surprising in the current patent environment, but the District Court's reasoning is illustrative of the current state of U.S. patent law.

The suit involved 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:

(As will become evident from the claims, there are several intermediate glycosylated rebaudioside derivatives, termed RebB, RebC, RebD, etc.)  The opinion sets forth that RebM is preferred due to its sweetness but that it only exists as "less than about 0.1% by weight of the total steviol glycoside content . . . in the natural stevia plant."

PureCircle asserted all claims in U.S. Patent Nos. 9,243,273 (claims 1-14) and 10,485,257 (claims 1-7), and Sweegen moved for summary judgment that the '257 patent and '257 patent were invalid under 35 U.S.C. § 101 and § 112(a); the opinion set forth these claims as representative:

Claim 1 of the '257 patent:

1.  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:

1.  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.

As stated in the opinion, "the method of the Asserted Patents makes Reb M by using UGT enzymes to add sugar units to a steviol glycoside with less than six sugar units until it has six, thereby converting it to Reb M," wherein the UGT-glucosyltransferase enzymes used in the claimed methods are produced recombinantly in yeast cells.

The District Court granted PureCircle's motion that Sweegen's commercial product, Bestevia Reb M, infringed claims 1-7 of the '257 patent, which Sweegen did not dispute "to the extent that the claims are valid."  With regard to invalidity, Sweegen contended that the product of the claims was naturally occurring and that the method for making them merely replicated what occurs natively in the stevia plant.  Accordingly, Sweegen maintained, the claims were invalid for being direct to laws of nature under the Supreme Court's subject matter eligibility jurisprudence, which the District Court recognized to include Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2350 (2014); Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 577 (2013); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 89 (2012); and Diamond v. Diehr, 450 U.S. 175, 185 (1981).  In addition, Sweegen asserted that the claims lacked an inventive concept base on five distinctions asserted in response by PureCircle:

1) the use of "recombinant" UGT enzymes in Claims 1-7 of the '257 Patent;
2) the use of "host microorganisms" to "express" the UGT enzymes in Claims 6-7 of the '257 Patent and Claims 12-13 of the '273 Patent;
3) the purity percentages for Reb M in Claims 3-5 of the '257 Patent and Claims 4-6 of the '273 Patent;
4) the conversion percentages of Reb D to Reb M in Claims 1 and 7-11 of the '273 Patent; and
5) the use of the UGT76G1 UGT enzyme in Claim 14 of the '273 Patent.

For the first two of these, Sweegen contended that the structure and function of the UDP-glucosyltransferases recited in the claims were identical to these enzymes as they exist in nature and did not recite "any non-natural role the enzyme plays in the claimed process" (which is a frequent source of invalidating comparison for any naturally occurring compound, insofar as changing the structure and/or function reduces or eliminates the desired biological activity).  Regarding the third and fourth allegations of subject matter eligibility, Sweegen argued that the asserted claims contained no "steps or methods for achieving the claimed purity or completion percentages" (although this argument appears more fitting for a non-enablement or indefiniteness arguments).  Finally, as to the fifth allegation, Sweegen argued that the disclosed enzyme, termed UGT76G1 was also naturally occurring.

PureCircle argued that the preparation methods did not occur in nature, with regard to taking an isolated RebA preparation and using a recombinant UDP-glucosyltransferase, analogizing these claims to the claims found patent-eligible in Rapid Litig. Mgmt Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1047 (Fed. Cir. 2016), and Illumina, Inc. v. Ariosa Diagnostics, 967 F.3d 1319, 1325-29 (Fed. Cir. 2020).  PureCircle also pointed out that, in nature, the plant contains enzymes that deglucosylate steviol glycosides, thus making impossible production of RebM in quantities achieved using the claimed methods.

Sweegen countered by arguing that claims reciting man-made elements can be ineligible under Federal Circuit precedent, citing Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743, 750, 753-54 (Fed. Cir. 2019); Roche Molecular Systems, Inc. v. CEPHEID, 905 F.3d 1363, 1371-73 (Fed. Cir. 2018); Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1373-74, 1376-77 (Fed. Cir. 2015), and further that the recited enzymes are "structurally and functionally identical to the naturally occurring UGT enzymes" and accordingly do not overcome patent-ineligibility of the asserted claims.  Moreover, Sweegen argued that the purity and percentage of conversion to RebM do not in themselves change the "underlying natural process[es]."  Finally, Sweegen argued that "methods of preparation" are not per se patent-eligible under the cited precedent.

The District Court agreed with Sweegen, finding claims 1-5 of the '257 patent and claims 1-11 and 14 of the '273 patent invalid for reciting patent-ineligible subject matter.  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 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.

The claims of the '257 patent not invalidated on Section 101 grounds recited:

6.  The method of claim 1, wherein the UDP-glucosyltransferase is expressed in a host microorganism.

7.  The method of claim 6, wherein the host microorganism is selected from the group consisting of: Escherichia coli, Saccharomyces species, Aspergillus species, and Pisehia species.

And the claim of the '273 patent not invalidated on Section 101 grounds recited:

13.  The method of claim 12, wherein the UDP-glucosyltransferase host microorganism is selected from the group consisting of: Escherichia coli, Saccharomyces species, Aspergillus species, and Pischia species.

The District Court recognizing these recited limitations as providing "something more" than the natural law as required under Supreme Court and Federal Circuit precedent, that something being in this case "a particular step performed by a human for achieving a particular result," which the Court finds "takes those claims beyond the natural law itself."

Turning to Sweegen's motion for an invalidity finding on written description grounds, the District Court agreed with Sweegen that the recited claim element "UDP-glucosyltransferase" is a "broad, functionally-defined genus" and thus can embrace "not just naturally occurring UDP-glucosyltransferases, but 'any' UDP-glucosyltransferase mutant, fusion, and UDP-glucosyltransferase known or discovered after the patents' . . . filing date" (estimated by Sweegen to encompass a trillion (1012), molecules, "a limitless number," citing Juno Therapeutics, Inc. v. Kite Pharma, Inc., 10 F.4th 1330, 1337 (Fed. Cir. 2021)).  The District Court also agreed with Sweegen that the specification does not recite a "a representative number of species or identify any common structural features for UGT enzymes" and that the sequence similarities between different UDP-glucosyltransferase were not correlated with enzymatic activity.  In evidence was a comparison between 12 UGT enzymes wherein only 4 had shown an enzymatic activity that added glucose to steviol glycoside molecules.  PureCircle countered this evidence by asserting that the term ""UDP-glucosyltransferase" is structural because, inter alia, there are other UGT enzymes that do not add glucose residues to rebaudiosides and that the Court's claim construction limits the scope of the claims to those UGT enzymes that do transfer glucose moieties into rebaudiosides as disclosed and claimed.  Finally, PureCircle argued that there are disputed material facts that preclude summary judgment, including that the term "UDP-glucosyltransferases" was itself structural and the structure of functional UGT enzymes had been determined by crystallographic comparisons (unfortunately for PureCircle, the District Court found that none of these crystallographically determined common structural features were disclosed in the specification).  Sweegen countered that the specification did not provide (express) written description support for "every" UGT enzyme capable of converting inter alia RebD to RebM (which was the construction the Court gave to the claim element "UDP-glucosyltransferase").  In addition, Sweegen asserted that neither of the specifications disclosed structural features common to members of the genus of UDP-glucosyltransferases.

The District Court considered the issue to be whether the genus of UDP-glucosyltransferases was defined (and described) structurally or functionally and, deciding it was the latter, found that the claims did not provide adequate written description support.  This determination was supported by the stipulated meaning of the term, i.e., "[a] type of enzyme that is capable of transferring a glucose unit from a uridine diphosphate glucose molecule to a steviol glycoside molecule."  Accordingly, the fact that these claims reciting this limitation were "original" claims they were not entitled to a presumption of adequate written description support.  Under these circumstances, the Court held, precedent requires a showing that "the applicant has invented species sufficient to support a claim to the functionally-defined genus," citing Juno, 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," citing Ariad Pharma. Inc. v. Eli Lilly & Co., 598 F.3d 1336, 1352 (Fed. Cir. 2010).  The opinion states that there is no dispute between the parties that the specification does not expressly disclose "structural features common to all UGT enzymes" having the recited function; in fact only 4 UGT enzymes are disclosed (UGT76G1, UGT91D2, UGT91D2e, and UGT91D11) and the specification further states that "the particular UDP-glucosyltransferase used in each reaction can either be the same or different, depending on the particular site on the steviol glycoside substrate where glucose is to be added."  Amino acid sequence comparisons, which had been sufficient to overcome a written description rejection before the Patent Office were not persuasive before the Court, based on an understanding that "[a]n enzyme's amino acid sequence does not necessarily predict the enzyme's activity (or functionality) and, therefore, testing is always required to determine the enzyme's activity (or functionality)," from which the Court concluded that "two enzymes with the similar sequences can have different functions and two enzymes with very different sequences can have the same function" (which, to be candid overstates what is a relatively weak biological rule of thumb).  But here, the Court found that a comparison of two of the disclosed UDP-glucosyltransferases (UGT76G1 and UGT91D2) did not disclose common structural features sufficient to satisfy the requirement for an adequate written description.  Finally, the District Court found that as of the filing date common structural features between different UDP-glucosyltransferases were not known in the art (and what features that were known were not universally associated with UDP-glucosyltransferase function).  Accordingly, the District Court granted Sweegen's motion that all asserted claims were invalid for failure to satisfy the written description requirement of 35 U.S.C. § 112(a).

The Court dismissed as moot a third ground of invalidity asserted by Sweegen, sounding in non-enablement.  However, in view of the District Court's rationale in its written description determination, and the recent trend at the Federal Circuit in applying the enablement standard in chemical, pharma, and biotechnology cases (see, e.g., Amgen Inc. v. Sanofi and Idenix Pharmaceuticals LLC v. Gilead Sciences Inc.) it is unlikely that PureCircle would have received any different outcome if the Court had considered this ground on the merits.

While the District Court's decision is likely to be followed by an appeal to the Federal Circuit, PureCircle should expect an uphill battle.  On the written description issue, as a question of fact the District Court is entitled to "clear error" deference which should prove difficult to overcome in view of the reasoning based on evidence cited in the opinion.  And no patentee having had their claims invalidated under Section 101 has had any reason to be sanguine on appeal for the past ten years (although the recent Solicitor General's amicus brief recommending the Supreme Court revisit the subject matter eligibility issue in Am. Axle & Mfg., Inc. v. Neapco Holdings LLC at least raises the possibility that there may be (perhaps just faint) hope for the standard to be reconsidered).

Solicitor General Provides Government Views in American Axle & Mfg. Inc. v. Neapco Holdings Co.

By Kevin E. Noonan --

The faintest glimmer of hope crept over the clouded patent law horizon today, when the Solicitor General provided the government's views to the Supreme Court in an amicus brief in American Axle & Manufacturing, Inc., Petitioner v. Neapco Holdings LLC.  A simple synopsis is provided in the first sentences of the Discussion section of the brief:  "The court of appeals held that claim 22 of the '911 patent, which claims a method of manufacturing automobile driveshafts that uses specific mechanical structures and calibrates particular physical properties, is patent-ineligible under Section 101.  That holding is incorrect."  The Solicitor General expresses the government's view that the Court should grant certiorari with respect to Question 1 of the Questions Presented.  Hallelujah.

The first portion of the brief sets forth the background of the invention, the patent, the litigation, and both Federal Circuit panel (1 and 2) and en banc opinions (the latter deciding not to rehear the case en banc).  In summary, a divided panel (Judges Dyk and Taranto) affirmed the District Court's summary judgment decision that the claims below are ineligible for patenting under the Supreme Court's decisions in Mayo Collaborative Servs. v. Prometheus Labs., Inc. and Alice Corp. Pty. Ltd. v. CLS Bank International.

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.

The majority's rationale, which the Solicitor General argues was erroneous, was based on the claims reciting nothing more than a "natural law" (Hooke's Law), despite this physics concept appearing nowhere in the claims.  Judge Moore strongly dissented in both the original panel decisions and the decision not to rehear the matter en banc.

The Solicitor General's brief is directed to the first of the Questions Presented:

Section 101 of the Patent Act of 1952, 35 U.S.C. 1 et seq., provides that "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof," is eligible for a patent.  35 U.S.C. 101.  The questions presented are as follows:

1.  Whether claim 22 of petitioner's patent, which claims a process for manufacturing an automobile driveshaft that simultaneously reduces two types of driveshaft vibration, is patent-eligible under Section 101.

2.  Whether patent-eligibility under Section 101 is a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of the art at the time of the patent.

The Solicitor General's (SG) argument is based on traditional concepts of patent-eligible subject matter.  The SG states that "[h]istorically, [later specified as "for more that 150 years"] such industrial techniques have long been viewed as paradigmatic examples of the 'arts' or 'processes' that may receive patent protection if other statutory criteria are satisfied."

The brief states in several places that it is the Mayo/Alice framework itself that has "given rise to substantial uncertainty."  It is perhaps a not-so-subtle signal that the SG's brief cites for many of these historical principles the Court's decision in Diamond v. Diehr, perhaps signaling to the Court that in making its rhetorical choice in Mayo, the Court would have been better served to follow Diehr rather than Parker v. Flook, which was decided earlier.  The SG's brief sets forth four "relevant considerations" that "supply useful guideposts" in properly applying the Mayo/Alice test.  These are:

First, a fundamental distinction between patents that "claim the 'building blocks' of human ingenuity" and those that "integrate the building blocks into something more," and "thereby 'transforming' them into a patent-eligible invention."  The brief characterizes the purpose of the test to "distinguish between those two types of claimed inventions."  The brief cites again Diehr to be illustrative of the difference between patent-eligible and -ineligible claims.

Second, that the Court has equally recognized that "[a]t some level, 'all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,' " citing (ultimately) Mayo, and that this recognition produced on the Court an obligation to "tread carefully in construing th[e] exclusionary principle lest it swallow all of patent law," and that "an invention is not rendered ineligible for patent simply because it involves" a patent-ineligible concept, citing Diehr and providing as an example Eibel Process Co. v. Minnesota & Ontario Paper Co., 261 U.S. 45, 52-69 (1923).

Third, the SG implicates the importance (and restrictions) that "the Section 101 inquiry is guided by historical practice and judicial precedent," citing Bilski v. Kappos, 561 U.S. 593 (2010), for this reliance (and obligation) on history.  These obligations are particularly relevant here, according to the SG, because "[c]ourts thus should be skeptical of any assertion that a claim for the sort of process that has long been held patent-eligible, such as an industrial manufacturing process, is unpatentable under the 'law of nature' exception."

Finally, the SG raises the Court's concern regarding preemption (as a justification for the exclusionary exceptions with regard to the constitutional limitations of Congress's power to grant patents).

The SG advocates that the Federal Circuit erred in the applications of these principles, in particular comparing American Axle's claims and the claims in Mayo and Alice.  In the SG's view, the claims at issue here are an application of natural law (such as Hooke's law) that are eligible "because all useful inventions that operate in the physical world depend for their efficacy on natural laws (whether known or unknown), such dependence by itself cannot render claim 22 patent-ineligible" (the SG making explicit favorable comparisons again with the claims in Diehr).  The SG in similar fashion sees the claims here to be consistent with the Supreme Court's eligibility principles as illustrated herein.

The SG also distinguishes Claim 22 here from Claim 8 in Morse's patent invalidated by the Court in O'Reilly v. Morse, 56 U.S. (15 How.) 62 (1854).  The SG's basis for this distinction is that Claim 22 does not merely recite a "goal" (analogous to Morse's claim) but rather "recites a specific sequence of steps to achieve that goal."  The brief makes an important argument regarding the panel majority's reasoning in this regard, saying that the majority committed fundamental error in its "premise that conventional claim elements could be disregarded at step two of the Mayo/Alice test."  And the SG traces that error to the language in both Mayo and Alice that "a claim must include more than steps or elements that are 'well-understood, routine, conventional activities' in the relevant field."  But the SG apprehends that the Court "did not intend to endorse a categorical rule that conventional claim elements should be disregarded in determining whether particular claims reflect an " inventive concept, " or "add enough" to natural laws or phenomena, so as to warrant patent protection."  The basis for this apprehension is that the Court "did not question the long-settled understanding that the patent eligibility of a process claim turns on 'the process as a whole, and that 'an application of a law of nature or mathematical formula' may be patent-eligible even if the law or formula is applied 'to a known structure or process,'" again citing Diehr.

And this question is "especially important" according to the SG because its answer is relied upon in addressing the second step of the Mayo/Alice test.  In view of this importance, the SG states that "the step-two analysis should be performed in accordance with the longstanding principle that a combination of claim elements may reflect a patent-eligible invention even though each individual element was part of the prior art" (emphasis added).  The SG suggests that what cannot happen is for a court to be foreclosed in step two of the Mayo/Alice test from considering claim elements that have "traditionally been viewed as relevant to patent-eligibility" (because they are "routine, conventional, and well-understood," for example), then those considerations would need to be "incorporated in some fashion into the step-one inquiry."

The SG also takes the opportunity to review the somewhat bedraggled ("fractured") state of eligibility jurisprudence at the Federal Circuit, citing specifically Athena Diagnostics, Inc. v. Mayo Collaborative Servs., LLC, 915 F.3d 743 (Fed. Cir. 2019), and Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015) (and noting in each instance that rehearing was denied).  This "ongoing uncertainty" has caused "every judge" on the Federal Circuit to ask for Supreme Court clarification of the standard (citing Judge Moore's dissent below).  The SG also notes and calls out the particular problems that have arisen regarding the proper scope of eligibility in fields such as medical diagnostics (again citing Judge Moore).  But, the SG notes, the problem of "inconsistency and unpredictability of adjudication" extend to "all fields," citing Judge Newman's dissent in Yu v. Apple Inc., 1 F.4th 1040, 1049 (Fed. Cir. 2021), and Chamberlain Grp., Inc. v. Techtronic Indus. Co., 935 F.3d 1341, 1348 (Fed. Cir. 2019).  Also garnering mention is the commentary accompanying the 2019 Guidance on Subject Matter Eligibility at the USPTO, which asserted that interpreting the Supreme Court's and Federal Circuit's jurisprudence on subject matter eligibility has been "in a consistent manner has proven to be difficult"; "has caused uncertainty in this area of the law"; has made it difficult for "inventors, businesses, and other patent stakeholders to reliably and predictably determine what subject matter is patent eligible"; and "poses unique challenges for the USPTO" itself.

The brief concludes with the SG's opinion that this case is a suitable vehicle for the Court to provide the requested "greater clarity," and rebuts each of Respondent's reasons why the Court should not grant certiorari.  As for the second of the Questions Presented, the SG states that the Court must clarify eligibility by addressing the first Question because the procedural answer to the Second ("satellite") Question depends on the Court's answer to the first.

Whether due to the change of administrations, or the mounting number of certiorari petition denials on subject matter eligibility, or the facial egregiousness of finding claims to methods for reducing vibration in a truck axle ineligible as being nothing more than a natural law, the SG's brief raises the possibility that the Court will reduce if not refute some of the more worrisome extensions by lower courts of its Mayo/Alice precedent.  While Respondents and others have urged the Court to consider eligibility cases from the life sciences or computer technologies, it is perhaps better for a simpler technology to be the basis for the Court's reconsideration, in the same way that patent practitioners just starting out learn their craft by drafting simple mechanical claims.  Without the distraction of the technology, perhaps, the foundational principles that patent laws have traditionally relied upon may become easier to discern and produce a more consistent, reliable test that has fewer anomalous results and that restores the ability to patent American innovation in important technological areas.  A patent practitioner can dream, after all.

Repifi Vendor Logistics, Inc. v. Intellicentrics, Inc. (Fed. Cir. 2022)

By Michael Borella --

There is a theme running through many patent-eligibility disputes that is analogous to baiting-and-switching.  One party has claims that recite an invention.  The other party characterizes those claims at a high level or generalizes them to the point that much of the actual claim language is largely ignored.  Then, the other party argues that the claims as generalized -- their patent-eligibility alter ego -- are invalid under 35 U.S.C. § 101 for whatever reason.

This technique can be remarkably effective.  It is also intellectually dishonest, as the thing that is rendered invalid is not what the patentee has claimed, it is the alter ego.  But the alleged invalidity of a claim's alter ego is imputed to the actual claim.  Thus, a claim can be invalid if it can be made to look like something that is invalid, rather than actually being invalid itself.  In the worst case, an otherwise valid claim can be rendered invalid through this argumentative technique.

One might think that patent challengers would not get away with such pulling of the wool over a court's eyes very often.  But that would be incorrect.  This dubious practice has been a winning argument in the Federal Circuit so many times that it is now firmly baked into § 101 jurisprudence.

Case in point, Repifi sued Intellicentrics in the Eastern District of Texas, alleging infringement of U.S. Patent No. 10,304,268.  The District Court found the claims ineligible for patenting under § 101, and dismissed the case on the pleadings.  Repifi appealed.

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

In practice, either part of the Alice test can be satisfied when a claim recites a specific, technical advance over the prior art.  The Federal Circuit made this explicitly clear for part two in Dropbox Inc. v. Synchronoss Techs. Inc., holding that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  Similar reasoning can be pieced together for part one through a synthesis of Federal Circuit decisions since 2014.

Claim 1 of the '268 patent was deemed representative.  Its actual claim language recites:

1.  A method for credentialing visitors to an access-controlled environment by an access administrator, comprising the steps of:
    (a) providing a smart-phone based credentialing platform having global positioning system (GPS) capability;
    (b) providing an electronic badge having a display having electronically controlled and changeable indicia thereon, the badge adapted communicate with a smart-phone;
    (c) enrolling a visitor into the credentialing platform by entering visitor information based on requirements of the administrator;
    (d) approving, by the administrator, that the requirements of the step of enrolling are met;
    (e) requesting, by the visitor, at least one location for which access is desired and submitting the at least one location to the administrator via the credentialing platform, said location having a pre-defined area;
    (f) approving, by the administrator, the request for access at the at least one location;
    (g) checking in on the smart-phone, by the visitor, via the credentialing platform, to establish check-in data including check-in time and date by the visitor, wherein the check-in data is recorded by the credentialing platform;
    (h) communicating between the smart-phone and the electronic badge, indicia data for forming a display image on the display on the electronic badge;
    (i) displaying on the badge display indicia showing access by the visitor is authorized to the location during the specific time interval;
    (j) recording, by the credentialing platform, geo-location data of the visitor during the visitor's presence in the pre-defined area;
    (k) checking out of the system when the visitor departs the pre-defined area of the at least one location, establishing check-out data, including checkout time and date and geo-location;
    (l) recording, by the credentialing platform, the check-in data, the geo-location data and the checkout data of the visitor; and
    (m) removing from the badge display, the indicia showing access by the visitor is authorized.

Right out of the gate, the Court noted that "[t]he parties agree that the claimed invention relates to the field of managing visitor access to access-controlled environments like hospitals, health care facilities, office buildings, and the like."  That characterization should send off warnings to the § 101-cautious, as it describes the invention's business and administrative contribution rather than its technical contribution.

Nonetheless, the Federal Circuit went on to apply part one of Alice.  In doing so, it agreed with the District Court that the patent is directed to "the abstract idea of credentialing visitors and checking them in and out of an access-controlled environment."

And there we have the alter ego.  The Court found that this alter ego of the claims was "a well-established business practice, a method for organizing human activity, and an abstract idea."  The Court went on to state "the automation of the credentialling process using existing technology such as smart phones and electronic badges . . . does not save claim 1 from targeting an abstract concept," and that "the automation of this conventional human process to make it more efficient is itself an abstract idea."

And that was it for part one.  When viewed at such a high level, the claim's alter ego does seem abstract.  But that abstraction was introduced by the Court rather than the claim itself.  Do conventional credentialing processes include the checking in, communicating, and displaying steps as claimed?  If findings of fact were made, they are not in this decision.  Consequently, we are left with circular reasoning -- the claim is abstract because the Court only considers an abstracted version of it.

Moving on to part two of Alice, the Court -- to its credit -- considered at least some of the claim language.  It noted that "the '268 patent specification acknowledges that an electronic badge is a well-known device that can, for example, be implemented using a commercially available smart card" and that these devices could communicate with smartphones.  But then the Court concludes that "the claims merely recite the use of conventional abilities of a conventional electronic badge."

On its face, the Court's reasoning is problematic and conclusory.  The mere existence of smart cards that can communicate with smartphones does not establish that that all features of the checking in, communicating, and displaying are well-understood, routine, or conventional.  The Court goes on to dismiss Repifi's arguments regarding the improvements provided by the invention stating "we agree with the district court that these advantages and improvements identified in the specification all stem from the automation of a historically human process and cannot save the claims at Alice step two."

In other words, even if the invention does provide improvements over the prior art, the improvements are still abstract.  Or, you don't get an inventive concept from the combination of abstract ideas.

So the Court finds the alter ego invalid, and the claim falls with it.  The suit was dismissed on a Rule 12(b)(6) motion, with the asserted claims affirmed as invalid.  Their crime?  Being able to be too easily fictionalized.

Repifi Vendor Logistics, Inc. v. Intellicentrics, Inc. (Fed. Cir. 2022)
Nonprecedential disposition
Panel: Circuit Judges Taranto, Hughes, and Stoll
Opinion by Circuit Judge Stoll

Mentone Solutions LLC v. Digi International Inc. (Fed. Cir. 2021)

By Michael Borella --

Mentone sued Digi for alleged infringement of Mentone's U.S. Patent No. 6,952,413.  The U.S. District Court for the District of Delaware found the claims of the patent to be ineligible under 35 U.S.C. § 101.  Mentone appealed.

The invention of the '413 patent is directed to improvements in the allocation of wireless resources for wireless packet data channels (PDCHs).[1]  In the relevant technology, the wireless air interface resources are shared using a technique called time-division multiplexing.  Each PDCH is represented by a repeating set of paired time slots in the uplink and downlink directions.  The uplinks carry information from a mobile device to a base station and the downlinks carry information from the base station to one or more mobile devices.

Figure 1 of the '413 patent, shown above, provides an example, with time flowing from left to right.  Each uplink and downlink consists of repeating frames of 8 slots, numbered 0 to 7.  Thus, Figure 1 depicts two frames of slots in both the uplink and downlink directions.

A PDCH is the set of slots, from both the uplink and the downlink, that have the same number.  Thus, PDCH 0 consists of all slots numbered 0, PDCH 1 consists of all slots numbered 1, and so on.  These PDCHs are shared amongst the mobile devices that communicate by way of the base station.  Thus, a mechanism to allocate them dynamically is needed to allow for efficient packet data communication, which is often bursty.  A particular mobile device may be allocated n contiguous PDCHs at any given point (where n is no more than 8 in this example).

To facilitate uplink communication, the base station transmits an uplink status flag (USF) in a downlink PDCH slot.  The USF identifies a particular mobile device and informs the mobile device that it may transmit in up to n uplink slots in the subsequent frame, beginning with the uplink slot of the same PDCH.  In other words, if n=4 and a USF in downlink slot 2 identifies the mobile device, then the mobile device may transmit in uplink slots 2, 3, 4, and 5 of the next frame.

For example, in Figure 2 of the '413 patent, n=4 and the USFs in each downlink slot 0 indicates that a particular mobile device may transmit in uplink slots 0, 1, 2, and 3 (indicated by the shaded uplink slots).  Thus, there is a fixed relationship between the downlink slot in which a USF is received and the first uplink slot in which the mobile device can transmit.

Such a system is limited by the ability of the mobile device to switch between receiving and transmitting modes.  In particular, a mobile device might not be able to receive a USF in a downlink slot that immediately follows an uplink slot in which the mobile device was transmitting.  Figure 3 of the '413 patent illustrates this problem -- the second (rightmost) USF immediately follows the mobile device's last uplink transmission of the first frame.  The mobile device might not be able to transition quickly enough from transmitting mode to receiving mode in order to be able to receive this USF.

The '413 patent purports to overcome the limitations of these standardized techniques by allowing the first uplink slot associated with a USF to be "shifted" so that there is enough time between downlink and uplink slots assigned to the mobile device for the mobile device to change its mode.  The resulting advantages, as stated in the patent's specification, involve elimination of rigid slot assignment restrictions thereby allowing increased data transmission rates.

Applying the invention to the arrangement of Figure 3 could result in the arrangement of Figure 4, in which the USF slots and the transmission slots are at least one slot apart from one another.

Independent claim 5 of the '413 patent was at issue, and recites:

A multiple access communication method in a mobile station, comprising the steps of:
    receiving an assignment of at least a first PDCH (packet data channel) and a second PDCH;
    monitoring an assigned PDCH to detect a USF; and
    transmitting on an assigned PDCH corresponding to the USF,
    wherein (i) if shifted USF operation is not used then a first assigned PDCH is monitored to detect a USF corresponding to the first assigned PDCH and (ii) if the shifted USF operation is used then a second assigned PDCH is monitored to detect the USF corresponding to the first assigned PDCH and a USF corresponding to the second assigned PDCH.

Digi moved to dismiss claim 5 and the other asserted claims under Rule 12(b)(6) on grounds of patent-ineligibility.

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

Applying the Alice test, the Court rapidly determined that part one was met.  Rather than an abstract idea, the Court found that claim 5 "is directed to a patent-eligible improvement to computer functionality, namely permitting additional multislot configurations for certain classes of mobile stations using extended bandwidth allocation.  Further, "[i]t adds this capability through using a shifted USF that breaks the fixed relationship in the timing of downlink allocation signaling (i.e., receipt of a USF on a timeslot) and subsequent uplink transmission."

In coming to this conclusion, the Court leaned heavily on the teachings of the specification with regard to the improvements over prior art techniques.  Particularly, the differences between the prior art arrangement of Figure 3 and that of Figure 4, as well as the resulting technical advantages, were emphasized.  Indeed, the Court emphasized that the term "shifted USF" was likely coined by the inventor and therefore one must look to the specification in order to be able to understand its meaning.

In the District Court, Digi had contended that claim 5 lacked specificity and that it should have recited "when, how, or why one would . . . shift the USF or how a shifted USF would specifically improve the functioning of a prior art system."  But the Federal Circuit dismissed this notion, indicating that the claimed shifted USF operation was particular enough and that the specification contained a detailed flow chart supporting the claimed operation.  Further, the Court noted that an explicit recital of the improvement provided by the invention was not necessary.

The District Court had found that claim 5 was directed to the abstract idea of "receiving a USF and transmitting data during the appropriate timeslots."  But the Federal Circuit shot down this interpretation, pointing to how the District Court had relied on "a high-level description of how USFs operate in mobile stations using extended bandwidth allocation generally" and was therefore improperly "untethered to the invention as claimed."

Concluding that claim 5 was not abstract, the Federal Circuit reversed the District Court's dismissal.

[1] The opinion does not do a fantastic job of describing the underlying technology.  A clearer explanation is found in the ‘413 patent, on which this description was based.

Mentone Solutions LLC v. Digi International Inc. (Fed. Cir. 2021)
Nonprecedential disposition
Panel: Chief Judge Moore and Circuit Judges Lourie and Dyk
Opinion by Chief Judge Moore

Top Stories of 2021: #4 to #6

By Donald Zuhn –-

After reflecting upon the events of the past twelve months, Patent Docs presents its 15th annual list of top patent stories.  For 2021, we identified nine 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 #9 to #7, and today we count down stories #6 to #4, as we work our way towards the top three stories of 2021.  As with our other lists (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 2021" on January 19, 2022 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.

6.  Patent Community Living with Subject Matter Eligibility Status Quo Nearly a Decade after Mayo v. Prometheus

It has been almost a decade since the Supreme Court issued its decision in Mayo v. Prometheus, and in the time that has passed since that decision, the current subject matter eligibility standard has become the status quo with little prospect for change.  Notwithstanding the subject matter status quo, subject matter eligibility once again made our top stories list -- as has been the case in seven of the past eight years.  In particular, stories involving subject matter eligibility took the #2 and #3 spots on our list last year after taking the #2 and #5 spots on our 2019 list; the #2 spot on our 2018 list; the #1, #2, and #4 spots on both our 2016 and 2015 lists; the #1 and #2 spots on our 2014 list; and the #1 spot on our 2013 list.

The year started with Patent Docs authors Kevin Noonan and Michael Borella joining two other Chicago patent attorneys in filing an amicus brief supporting Supreme Court review of the Federal Circuit's decision to invalidate claims of American Axle's U.S. Patent No. 7,774,911 under 35 U.S.C § 101 (our #3 story in 2020 was the Federal Circuit's decision in American Axle & Manufacturing, Inc. v. Neapco Holdings LLC).  In May, the Supreme Court requested the views of the Solicitor General in its consideration of American Axle's certiorari petition, which asks the Court to reverse the Federal Circuit's decision in American Axle.

And then in June, a divided Federal Circuit panel affirmed a District Court determination that claims directed to a digital camera were invalid under § 101 in Yu v. Apple.  A few months earlier, Senators Thom Tillis (R-NC), Mazie K. Hirono (D-HI), Tom Cotton (R-AR), and Chris Coons (D-DE) wrote to Drew Hirschfeld, current Commissioner of Patents and Acting Director of the U.S. Patent and Trademark Office, asking the USPTO to publish a request for information on the current state of patent eligibility jurisprudence in the United States, evaluate the responses, and provide Congress with a detailed summary of the Office's findings, particularly with regard to how the current jurisprudence has adversely impacted investment and innovation in critical technologies like quantum computing, artificial intelligence, precision medicine, diagnostic methods, and pharmaceutical treatments.  The Senators asked for a response by March 2022, so subject matter eligibility is likely to keep its top stories streak going in 2022.

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

• "CardioNet, LLC v. InfoBionic, Inc. (Fed. Cir. 2021)," November 16, 2021
• "On the Nature of Prior Art in the 35 U.S.C. § 101 Inquiry," August 10, 2021
• "Yu v. Apple (Fed. Cir. 2021)," June 13, 2021
• "Supreme Court Requests View of Solicitor General in American Axle v. Neapco," May 3, 2021
• "Could Alice Be Used to Invalidate Diehr? Of Course It Could," April 20, 2021
• "In re Board of Trustees of the Leland Stanford Junior University (Fed. Cir. 2021)," March 28, 2021
• "On the Patent Eligibility of Information Processing," March 15, 2021
• "In re Board of Trustees of the Leland Stanford Junior University (Fed. Cir. 2021)," March 14, 2021
• "Senators Request USPTO to Provide Information on Subject Matter Eligibility," March 9, 2021
• "Chicago Patent Attorneys File Supreme Court Amicus Brief in American Axle," February 4, 2021

5.  Federal Circuit Continues to Develop (and Limit) Section 112

In 2017, the Federal Circuit's decision in Amgen Inc. v. Sanofi, which brought clarity to how the Court (and U.S. Patent and Trademark Office) should apply the written description requirement in 35 U.S.C. § 112(a) to properly circumscribe the scope of claims to monoclonal antibodies, made it to #11 on our top stories list.  In February, the Federal Circuit took aim at the enablement requirement for antibody claims in Amgen, Inc. v. Sanofi, with similar, scope-limiting results.

The Federal Circuit followed that decision with several other decisions implicating the written description and enablement requirements, including Bayer Healthcare LLC v. Baxalta Inc. (enablement); Raytheon Technologies Corp. v. General Electric Co. (enablement); Pacific Biosciences of California, Inc. v. Oxford Nanopore Technologies, Inc. (enablement); Juno Therapeutics, Inc. v. Kite Pharma, Inc. (written description); Indivior UK Ltd. v. Dr. Reddy's Laboratories S.A. (written description); and Biogen Int'l GmbH v. Mylan Pharmaceuticals Inc. (written description).  As a result of the Federal Circuit's decision in Juno Therapeutics, the scope of claims relating to antibodies (as well as other chemical species) will likely be limited to a "what you see (i.e., disclose expressly) is what you get (patented)" model, which will no doubt (by reducing valid claim scope) allow copyists to piggyback on others' inventions to make their own competing species of valuable therapeutic agents.

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

• "Biogen Int'l GmbH v. Mylan Pharmaceuticals Inc. (Fed. Cir. 2021)," December 1, 2021
• "Indivior UK Ltd. v. Dr. Reddy's Laboratories S.A. (Fed. Cir. 2021)," November 28, 2021
• "Juno Therapeutics, Inc. v. Kite Pharma, Inc. (Fed. Cir. 2021)," August 26, 2021
• "Pacific Biosciences of California, Inc. v. Oxford Nanopore Technologies, Inc. (Fed. Cir. 2021)," May 20, 2021
• "Raytheon Technologies Corp. v. General Electric Co. (Fed. Cir. 2021)," April 18, 2021
• "Bayer Healthcare LLC v. Baxalta Inc. (Fed. Cir. 2021)," March 8, 2021
• "Amgen Inc. v. Sanofi (Fed. Cir. 2021)," February 21, 2021

4.  Supreme Court Reaffirms (But Limits Application of) Assignor Estoppel Doctrine

In June, a five-justice majority of the Supreme Court reaffirmed the doctrine of assignor estoppel, while at the same time limiting its application, in Minerva Surgical, Inc. v. Hologic, Inc.  Assignor estoppel prohibits an inventor or other owner of rights in a patent from selling that patent to another party, then practicing the invention while attempting to avoid infringement liability by claiming the patent was invalid from the start.  The Minerva majority found that the doctrine was well-established in the law and thus was unwilling to abandon it.  However, consistent with the equitable nature of the doctrine, the Court limited the doctrine to those instances where the assignor could be fairly understood to have warranted (either expressly or implicitly) the validity of the claims that ultimately issued.  Thus, in many circumstances -- such as when an inventor assigns rights to a patent application that issues with significantly broader claims -- the doctrine will not apply.

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

• "Minerva Surgical, Inc. v. Hologic, Inc. (2021)," June 30, 2021
• "Oral Argument in Minerva Surgical Inc. v. Hologic, Inc.," April 25, 2021

CosmoKey Solutions GmbH v. Duo Security LLC (Fed. Cir. 2021)

By Michael Borella --

CosmoKey asserted U.S. Patent No. 9,246,903 against Duo in the U.S. District Court for the District of Delaware, alleging infringement.  The District Court found the patent's claims to be ineligible under 35 U.S.C. § 101 because they were directed to an abstract idea and lacked an inventive concept.  On review, the Federal Circuit reversed, and provided a small glimmer of clarity illuminating the ever-elusive contours of the "inventive concept."

The Claimed Invention

Two-factor authentication is the current state-of-the-art when it comes to providing secure remote access to information and software applications.  In short, a user first registers their mobile device with an authentication entity.  When the user remotely logs on to a secure site (e.g., with a userid and password), the authentication entity transmits a challenge to the registered mobile device.  The user then either responds to this challenge (e.g., with a second password or some other form of identity verification), or provides information from the challenge (e.g., a numeric code) into the secure site.  If the provided credentials are correct, the user gains access to the site.  Doing so allows the authentication entity and the secure site to verify the user's identity in two ways -- based on what they know (the userid and password) and the devices to which they have physical access.

The '903 patent purports to improve on these procedures by having the secure site maintain an authentication function that is normally inactive.  When a user attempts to log in, the authentication function is activated for a short period of time.  During this period of time, the user must cause their mobile device to transmit a message to the authentication entity.  Advantageously, this does not require the user to enter credentials.

According to the '903 patent, this "provides an authentication method that is easy to handle and can be carried out with mobile devices of low complexity [and] it is a particular advantage of the invention that the mobile device does not have to have any specific hardware for capturing or outputting information." 

Claim 1 of the '903 patent recites:

A method of authenticating a user to a transaction at a terminal, comprising the steps of:
    transmitting a user identification from the terminal to a transaction partner via a first communication channel,
    providing an authentication step in which an authentication device uses a second communication channel for checking an authentication function that is implemented in a mobile device of the user,
    as a criterion for deciding whether the authentication to the transaction shall be granted or denied, having the authentication device check whether a predetermined time relation exists between the transmission of the user identification and a response from the second communication channel,
    ensuring that the authentication function is normally inactive and is activated by the user only preliminarily for the transaction,
    ensuring that said response from the second communication channel includes information that the authentication function is active, and
    thereafter ensuring that the authentication function is automatically deactivated.

The Patent-Eligibility Test

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

Last year, the Federal Circuit provided a major clue as to how to think about part two of Alice in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc. the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities: specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three qualities -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

District Court Proceedings

In the District Court, Duo moved for judgment on the pleadings under Rule 12(c), alleging that "the claims are directed to the abstract idea of authentication and do not recite any patent-eligible inventive concept."  The District Court granted the motion.

Applying part one of the Alice test, the District Court agreed with Duo, finding the claims focused on "the verification of identity to permit access to transactions."  Based on Federal Circuit precedent, the District Court concluded that authentication, in and of itself, was an abstract idea.

Applying part two, the District Court found that the claims and the specification merely taught generic computer functionality to carry out this abstract idea.  Particularly, the District Court wrote that "the detection of an authentication function's activity and the activation by users of an authentication function within a pre-determined time relation were well-understood and routine, conventional activities previously known in the authentication technology field."

Federal Circuit Majority Opinion

The Federal Circuit acknowledged that it had previously found claims directed to authentication to be abstract.  But the Court also noted that it had "held claims directed to specific verification methods that depart from earlier approaches and improve computer technology eligible under § 101."

Considering the District Court's part one analysis, the Federal Circuit disagreed with that body's characterization of the invention.  Instead, the Court opined that "the claims and written description suggest that the focus of the claimed advance is activation of the authentication function, communication of the activation within a predetermined time, and automatic deactivation of the authentication function, such that the invention provides enhanced security and low complexity with minimal user input."  However, the Court further noted that it need not resolve the tension between its view of the claims and that of the District Court, because the claims met the requirements of part two.

The Court centered its attention on the purported technical advance -- that the invention provides authentication using low-complexity processes and devices.  In view of this, the claims "recite a specific improvement to authentication that increases security, prevents unauthorized access by a third party, is easily implemented, and can advantageously be carried out with mobile devices of low complexity."  Moreover, the Court found that the invention solved a technical problem in the field of computer networks using steps that were not conventional -- notably, the last four steps of claim 1.

Thus, given the posture of the case -- a 12(c) motion for which all reasonable inferences are to be drawn in favor of CosmoKey -- the Court ruled that the claims as interpreted through the specification recite an inventive concept that goes beyond any alleged abstract idea therein.  Consequently, the Federal Circuit reversed the District Court's § 101 ruling.

Judge Reyna's Concurrence

Judge Reyna concurred with the majority's decision to reverse the District Court, but took issue with how the majority focused on part two of the Alice test without completing part one.  He believes that doing so violates the premises set forth in Alice.  In detail, he wrote:

Step two is rendered superfluous and unworkable without step one.  Without the benefit of a step-one analysis, we are hobbled at step two in reasonably determining whether additional elements transform the nature of the claim into a patent-eligible application of the abstract idea.  And by skipping step one, we create a risk that claims that are not directed to an abstract idea might be deemed to "fail" at step two.

This disagreement over whether step one is necessary or otherwise guides the exercise of step two is somewhat surprising.  As we have noted in a previous analysis, the Court actually looks for the same factors in both step one and step two -- novelty, specificity, and a technical character.  Thus, the Alice test is better thought of as a one-part affair with these three factors than having two distinct components.  In view of this, and in contrast to Judge Reyna's position, whether the eligibility evaluation takes place under part one or part two does not matter -- the outcome should be the same.

Judge Reyna's own Court is responsible for any confusion in the application of Alice.  It has had over seven years to interpret and set forth a clear set of guidelines for the § 101 inquiry.  But it has not.  Until this changes, arguments over what questions should be asked in each part of Alice are likely to continue.

In the mean time, this case reiterates the notion that a clearly established and specifically claimed technical improvement over the prior art is an inventive concept.

CosmoKey Solutions GmbH v. Duo Security LLC (Fed. Cir. 2021)
Panel: Circuit Judges O'Malley, Reyna, and Stoll
Opinion by Circuit Judge Stoll; concurring opinion by Circuit Judge Reyna

MyMail, Ltd. v. ooVoo, LLC (Fed. Cir. 2021)

By Michael Borella --

Two years ago, MyMail and ooVoo went to the mat in the Federal Circuit over claims that the District Court for the Northern District of California found ineligible under 35 U.S.C. § 101.  Patent holder MyMail was able to convince two out of three judges on the Federal Circuit panel that the dispute between the parties regarding claim construction required a remand to the District Court.  Now, with claims construed and once more found ineligible by the District Court judge, MyMail again appeals.

Background

MyMail's U.S. Patent Nos. 8,275,863 and 9,021,070, are both directed to "methods of modifying toolbars that are displayed on Internet-connected devices such as personal computers."  As an example of the claims under dispute, claim 1 of the '863 patent recites:

A method for dynamically modifying a toolbar, the method comprising:
    displaying the toolbar, at a user Internet device, that includes one or more toolbar buttons, the toolbar defined by toolbar data stored in one or more toolbar-defining databases, the toolbar data comprising a plurality of toolbar button attributes associated with the one or more toolbar buttons of the toolbar, wherein at least one of the plurality of toolbar button attributes identifies a function to be performed by a specific toolbar button upon actuation of the specific toolbar button;
    invoking, from the user Internet device without user intervention, communication of information associated with the one or more toolbar-defining databases to a server associated with a network address;
    receiving, at the server, the information associated with the one or more toolbar-defining databases;
    determining, based on the information associated with the one or more toolbar-defining databases, that the user Internet device should receive updated toolbar data;
    receiving, at the user Internet device, the updated toolbar data in response to determining that the user Internet device should receive the updated toolbar data;
    initiating, at the user Internet device and without user interaction, an operation to update the toolbar data in accordance with the received updated toolbar data;
    updating the toolbar data at the user Internet device based on the operation and in accordance with the updated toolbar data, thereby updating the toolbar data, the updating comprising at least one member of a group comprising (a) and (b): (a) updating the toolbar data to include at least one new attribute of the toolbar data to change the toolbar by adding a toolbar button to the toolbar; and (b) updating the toolbar data to modify an attribute of at least one of the one or more toolbar buttons of the toolbar; and
    displaying at the user Internet device the toolbar as defined by the updated toolbar data, wherein the information associated with the toolbar data includes at least one member of a group comprising a revision level, version, time, date, user ID, account owner ID, PAP ID, IP address, session keys, billing data, name, address, account information, connection history, procedures performed by a user, group ID, e-mail address, e-mail ID, e-mail password, residential address, and phone number.

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

Last year, the Federal Circuit provided a major clue as to how to think about patent eligibility in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc., the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities:  specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three qualities -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

District Court Proceedings

The claim construction issue centered on the term "toolbar."  The District Court construed this term to mean "a button bar that can be dynamically changed or updated via a Pinger process or a MOT script."  The District Court noted that changing or updating the toolbar with the Pinger process or MOT script is not required but the capability must exist.

While definitions of these two techniques turned out to not be critical in the ultimate § 101 outcome, for sake of completeness they are provided as follows.  A Pinger process is an identification and updating procedure for the toolbar that involves downloading of a database from server device to a client device hosting the toolbar.  A MOT script specifies how the toolbar is built from the database.

Applying part one of Alice, the District Court found that the claims are "directed to the abstract idea of updating toolbar software over a network without user intervention."  The District Court saw no significant difference between how the Pinger process and MOT scripts were defined in the specification versus the language of the claim.  Further, "MyMail failed to identify a specific improvement in computer functionality or a problem in the prior art that the claims solve."

Applying part two, the District Court concluded that all claimed components were generic and conventional, merely implementing the abstract idea.  MyMail did not make any arguments regarding the combination of additional elements, and the District Court found no inventive concept therein.

Federal Circuit Opinion

On appeal, the Federal Circuit largely agreed.

With reference to part one of Alice, the Court wrote that "we look at the focus of the claimed advance over the prior art to determine if the claim's character as a whole is directed to excluded subject matter."  For software inventions, this determination often is based on "whether the claims focus on specific asserted improvements in computer capabilities or instead on a process or system that qualifies as an abstract idea for which computers are invoked merely as a tool."

In view of these parameters, the Court observed that the claims are drawn to "no more than invoking computers as a tool to perform the abstract ideas of collecting information, analyzing information, and presenting the results of the analysis in the software update context."  The construction of the "toolbar" term did nothing to change the Court's view.

MyMail argued, somewhat circularly, that the "claims are instead directed to an improvement in the functionality of the software updating process . . . via a Pinger process or a MOT script."  But the Court found nothing in the specification that supported this notion, and stated that MyMail's arguments regarding the alleged improvement were conclusory.

Moving on to part two, the Court also found no inventive concept in the claims.  In particular, the Court found the claimed computer components to be generic and their functions to be routine.  The Court took a dim view toward the lack of specificity in how the claimed functions are performed, even when considered as an ordered combination in light of the claim construction.

Finally, MyMail cited to its success in avoiding and overcoming prior art challenges at the PTAB.  But MyMail pushed this too far, arguing that it was incorrect for the District Court to ignore those proceedings.  The Court adopted reasoning that we have seen since 2014's Ultramercial v. Hulu -- that claims found novel and/or non-obvious do not automatically have an inventive concept.  Instead, "a claim for a new abstract idea is still an abstract idea."

This aesthetically unsatisfying doctrine is best understood in terms of the three qualities noted above.  Even if there was some daylight between the claimed invention and the prior art, this difference needs to be a specifically-claimed technical improvement.  Since the Court found no technical improvement and implied that the claims were vague, at least two of the three qualities were missing.

Thus, the Court found the claims to lack patentability under § 101.

MyMail, Ltd. v. ooVoo, LLC (Fed. Cir. 2021)
Panel: Chief Judge Moore and Circuit Judges O'Malley and Reyna
Opinion by Circuit Judge O'Malley

On the Nature of Prior Art in the 35 U.S.C. § 101 Inquiry

    By Michael Borella and Ashley Hatzenbihler[1]--

Introduction

Diamond v. Diehr, decided by the Supreme Court in 1981, seemed to establish a bedrock principle of statutory construction for patent law.  The Court stated that "[t]he 'novelty' of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the 35 U.S.C. § 101 categories of possibly patentable subject matter."  That proclamation appeared to slam the door shut on any consideration of novelty, or by extension non-obviousness, as part of the subject matter eligibility calculus.  Indeed, this tenet held for over 30 years.

Then, in 2012, Justice Breyer wrote in Mayo v. Prometheus, "[w]e recognize that, in evaluating the significance of additional steps, the § 101 patent-eligibility inquiry and, say, the § 102 novelty inquiry might sometimes overlap."  This statement, if made in isolation, might have been considered misguided dicta in an opinion that otherwise relied on the reasoning of Diehr.  Yet Mayo went further, as Justice Breyer analyzed the claim language in question:

[T]he claims inform a relevant audience about certain laws of nature; any additional steps consist of well-understood, routine, conventional activity already engaged in by the scientific community; and those steps, when viewed as a whole, add nothing significant beyond the sum of their parts taken separately.  For these reasons we believe that the steps are not sufficient to transform unpatentable natural correlations into patentable applications of those regularities.

As a consequence of concluding that this claim was ineligible under § 101, the Court implicitly approved integrating a form of prior art consideration into the eligibly analysis.  A claim element that is "well-understood, routine, conventional" is by definition in the prior art.  In fact, such an element is indisputably and clearly in the prior art.[2]

In 2014, the Court spoke again on § 101, with Alice v. CLS Bank.  Alice did not explicitly overrule Diehr -- and in fact went to lengths trying to justify how its holding was consistent with the principles of Diehr.  But the justices left the rest of us scratching our collective heads, because Mayo and Alice sure do seem to contradict Diehr in rather impactful ways, including whether and how to consider prior art when evaluating eligibility.

To that point, since 2018, the Federal Circuit's Berkheimer v. HP decision has stood for the notion that whether additional elements are well-understood, routine, or conventional can be determined as a factual inquiry if such an answer is not apparent.  This further ties together patent-eligibility with obviousness, both being decided as a matter of law with underlying issues of fact.

But Berkheimer is just one example.  Indeed, comparisons between claimed inventions and prior art are found in a vast number of post-Alice Federal Circuit § 101 decisions including Koninklijke KPN N.V. v. Gemalto M2M GmbH, The Chamberlain Group, Inc. v. Techtronic Industries Co., Enfish v. Microsoft, McRO, Inc. v. Bandai Namco Games America Inc., Cellspin Soft, Inc. v. Fitbit, Inc., Data Engine Technologies LLC v. Google LLC, Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., and Internet Patents Corp. v. Active Network, Inc., just to name a few.

It is now indisputable that prior art is part of the § 101 test.  But the contours of the prior art analysis within a patent-eligibility inquiry remain surprisingly difficult to nail down.  The Federal Circuit has never specifically clarified how prior art influences the § 101 inquiry, giving the test an amoeba-like property that changes subtly from opinion to opinion.  With so much at stake -- for patent applicants, patent holders, accused infringers, and potential licensees -- at least a modicum of lucidity would be desirable.

Our goal is to explore this space through the words of the Federal Circuit that appear in numerous decisions over the last seven years.  We do so by aligning our investigation with the two prongs of the Alice test,[3] as an assertion of eligibility can be supported by distinguishing a claimed invention over the prior art in either prong.[4]  In doing so, we hope to provide a degree of illumination on this otherwise murky area of patent law.

Prior Art Under Prong One

A common definition of the prong one analysis in Federal Circuit jurisprudence is that it requires one to "look at the focus of the claimed advance over the prior art to determine if the claim's character as a whole is directed to excluded subject matter."  While this exact text is from Chamberlain, variations of it appear in approximately 20 decisions since 2016.  The earliest seems to be from Genetic Techs. Limited v. Merial, where Judge Dyk interpreted Mayo as considering that "the focus of the claimed advance over the prior art was allegedly newly discovered information about human biology."

But how does one determine such a "focus"?  In Yu v. Apple, for example, it is based on "the language of the asserted claims themselves, considered in light of the specification."  Chamberlain and a number of other cases also refer to the specification as a way of shining light on the "true focus" of a claim.  Mortgage Application Techs. v. Meridianlink also considered the prosecution history in this process.

With this in mind, it appears that there should be some form of advance over the prior art in the claims themselves or as explained by the specification in order to meet the hurdle of prong one.  But are there any constraints on the advance such that certain types of advances are less likely to be directed to judicial exceptions (and therefore more likely to render claims eligible) than others?  It turns out that there are.

The advance should be claimed specifically.  In Dropbox v. Synchross Techs., the claimed advance was "nothing but a functional abstraction" and the specification did not "define this abstraction as a technological solution."  In Chamberlain, the specification described the difference between the claimed invention and the prior art as "the broad concept of communicating information wirelessly," which also lacked specificity.  This implies that the claimed advance should involve how something is done, and go beyond just stating what is being done.  On the other hand, the claimed focus in Enfish was a "specific type of data structure" for which the specification describes its virtues over the prior art.  These claims were found to be non-abstract.

The advance should also truly be . . . an advance.  In Solutran v. Elavon, the specification established that all of the claimed steps were conventional despite also describing these steps as capturing the advance over the prior art.  As a result, the claims were found to be directed to an abstract idea.  Similarly, the focus of the claimed advance was found abstract in Intellectual Ventures v. Erie Indemnity Co. because it was drawn to computerizing "longstanding conduct that existed well before the advent of computers and the Internet."  In contrast, the claims of McRO recited a computerized process that had not been previously performed by humans, and were therefore non-abstract.

Certain types of advances are also given little or no weight under prong one.  In Trading Techs. Int'l v. IBG, the advance was that the claimed invention provided "information to traders in a way that helps them process information more quickly, not on improving computers or technology."  Such an advance, while potentially quite innovative, is often viewed as non-technical and therefore abstract.  Indeed, many claims to financial transactions are determined to be abstract regardless of whether they represent an improvement over the prior art.

Based on these observations, the focus of the claimed advance over the prior art should be presented in a specific manner that defines how the advance is achieved rather than in an outcome-oriented fashion.  But such a purported advance can be discounted if there is evidence that it is not truly an improvement over the prior art, or if it is non-technical in nature.

Additionally, in Cardionet v. InfoBionic, the Federal Circuit described at length that the prior art inquiry under § 101 need not include a search for references that read on the claim language.  Instead, "[i]n determining whether [the claims] are directed to an abstract idea, a court may well consult the plain claim language, written description, and prosecution history and, from these sources, conclude that the claims are directed to automating a longstanding or fundamental practice."  Nonetheless, it is not "impermissible for courts to look outside the intrinsic evidence as part of their Alice step one inquiry."

Put another way, the § 101 prior art determination under prong one can be made based on the four corners of the patent document and its file history rather than the search and comparison one would undertake when applying §§ 102 and 103.  But such a search and comparison is not prohibited.

Prior Art Under Prong Two

Prong two of Alice was characterized by the Supreme Court as "examin[ing] the elements of the claim to determine whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application."  As noted above, these additional elements must be more than just well-understood, routine, conventional activities or features previously known in the industry.  For instance, the Court held in Alice that generic computer components alone do not rise to the level of an inventive concept.

In view of the holding in Berkheimer, prong two can have a procedural impact that is typically absent from prong one.  In Aatrix Software v. Green Shades Software, the Federal Circuit fleshed out Berkheimer by stating that patent eligibility under § 101 can be determined on the pleadings, but "[t]his is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law."  On the other hand, "[i]f there are claim construction disputes . . . either the court must proceed by adopting the non-moving party's constructions . . . or the court must resolve the disputes to whatever extent is needed to conduct the § 101 analysis, which may well be less than a full, formal claim construction."  As a consequence, plaintiffs now front-load their complaints with factual allegations relating to the claimed advances over the prior art if they believe that their asserted patents are vulnerable to an Alice challenge.

Substantively, Dropbox provides the clearest statement setting forth the character of the prior art analysis under prong two.  In that case, the Federal Circuit states "an inventive concept exists when a claim recites a specific discrete implementation of an abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  Right there, we have the same three factors that dominate the prong one analysis -- specificity, technical character, and improvement over the prior art.  Nonetheless, in the world of patent-eligibility, nothing is that simple.  Dropbox get us most of the way home, but not all of the way.

The nuances are subtle.  To provide an inventive concept, the additional elements themselves must not be directed to judicial exceptions.  This was the case in Recognicorp, LLC v. Nintendo Co., where additional elements directed to image encoding procedures were deemed to be merely mathematical in nature, and thus also abstract.  Put succinctly in Synopsys, Inc. v. Mentor Graphics Corp., "a claim for a new abstract idea is still an abstract idea."  The Federal Circuit was more forceful on this point in SAP America, Inc. v. InvestPic, LLC, stating that, for an invention directed to mathematical techniques in finance, "patent law does not protect such claims, without more, no matter how groundbreaking the advance."[5]

Further, Mayo established that adding extra-solution activities to a claim does not provide an inventive concept.  Such activities involve those that are both pre-solution and post-solution, including simple gathering of data, high-level data processing, and generic displaying of data.  This was made clear in Electric Power Group, LLC v. Alstom S.A., when the Federal Circuit stated "selecting information, by content or source, for collection, analysis, and display does nothing significant to differentiate a process from ordinary mental processes, whose implicit exclusion from § 101 undergirds the information-based category of abstract ideas."  This falls under the specificity factor -- a non-specific or outcome-oriented element has little or no impact on patent-eligibility even if it is arguably not in the prior art.

Also, limiting the claims to a particular technological environment or solution space does not provide an inventive concept.  As an example, the claims in Electric Power Group were limited to power-grid monitoring, but this alone was not enough.  Putting this in the context of prior art, if it is known to carry out the claimed invention in one environment, doing so in another environment without more is not sufficient.

Notably, prong two also requires consideration of whether an inventive concept lies in the additional elements as an ordered combination.  Alice gave this aspect of the analysis short shrift, merely stating that "[c]onsidered as an ordered combination, the computer components of petitioner's method add nothing that is not already present when the steps are considered separately."  This conclusory language has apparently given the Federal Circuit and District Courts the understanding that they can also proceed in a conclusory fashion with prong two.  A large number of opinions effectively ignore or are dismissive of ordered combinations of additional elements, particularly when the Court finds the patentees' allegations of inventive concepts therein to be lacking.

Having said that, the Federal Circuit has added some color to the inquiry, stating in Chamberlain that:

The appropriate question is not whether the entire claim as a whole was well-understood, routine and conventional to a skilled artisan (i.e., whether it lacks novelty), but rather, there are two distinct questions: (1) whether each of the elements in the claimed product (apart from the natural laws themselves) involve well-understood, routine, conventional activity previously engaged in by researchers in the field, and (2) whether all of the steps as an ordered combination add nothing to the laws of nature that is not already present when the steps are considered separately.

An example of the ordered combination saving the day for a patentee is in BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC.  There, the additional elements, taken individually, provided only generic computer, network, and Internet components, none of which rose to the level of an inventive concept on its own.  However, the Court found that the ordered combination of these elements afforded a technical solution that provided the benefits of two different prior art arrangements that were previously available only individually.  Thus, this beneficial ordered combination was an inventive concept.  Amdocs (Israel) Limited v. Openet Telecom, Inc. drove this point home with the Court stating "[w]hile some individual limitations arguably may be generic, others are unconventional and the ordered combination of these limitations yields an inventive concept sufficient to confer eligibility."  In short, the improvement over the prior art can be found in a combination of elements.

Finally, Recognicorp also held that "[t]o save a patent at step two, an inventive concept must be evident in the claims."  However, this does not imply that one cannot look to the specification to obtain an understanding of improvements over the prior art -- Berkheimer clearly supports such an undertaking.  Instead, the improvements as alleged in the specification or elsewhere must be recited -- at least in some fashion -- by the claims.

To summarize, an inventive concept can be found in the claim language of one or more additional elements and/or the combination thereof.  The inventive concept should be a specific, technical advance over the prior art that is not an extra-solution activity or a field of use limitation.

Conclusion

So where do these observations get us?  Last year we provided empirical evidence that the eligibility of claimed inventions is highly correlated with the claims' specificity, technical nature, and novelty.  We further argued that this evidence suggests more than just a correlational relationship -- that these three factors play a causational role in determining patent eligibility.  But in that study we did not attempt to break down how the three factors influence each of the two prongs of Alice.

After digging into the precise character of the relationship between eligibility and prior art, we find that specificity, technical nature, and prior art can be considered in both prong one and prong two of Alice.  While our initial focus was on how prior art considerations can sway the § 101 inquiry, specificity and technical nature are part of this equation and cannot be ignored.  To truly understand the link between a § 101 outcome and prior art, one at least needs to keep these other factors in mind.

Consequently, one could argue that the two prongs of the Alice test have been, in practice, unceremoniously yet effectively collapsed into a single prong.  Indeed, such anecdotal arguments have been made in the past, and the investigation herein supports such a notion.  Further, in accordance with our previous study, the three factors remain significant influencers of the eligibility outcome.

[1] Ashley Hatzenbihler is a student at Loyola University Chicago School of Law where she is focusing her studies on Intellectual Property.  Ashley is an associate editor of the Loyola University Chicago International Law Review and was a staff member of the Loyola University Chicago Law Review (vol. 52).  Currently, she is a Summer Associate at McDonnell Boehnen Hulbert & Berghoff.  Prior to law school, Ashley received her Bachelors in Mechanical Engineering with a minor in Mathematics from Marquette University.  Ashley also completed her Masters of Science in Mechanical Engineering from Marquette University, with her research focusing on the optimal conditions for auto-ignition testing of diesel fuels and surrogates.

[2] In contrast, an element lacking novelty or non-obviousness is not automatically well-understood, routine, or conventional.  For example, a practice that is disclosed in only in an obscure journal article that is known to just few experts in the relevant field is not well-understood, routine, or conventional, whereas a practice that is carried out daily in multiple laboratories would fall into this category.  See Berkheimer v. HP ("Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination and goes beyond what was simply known in the prior art.").

[3] Prong one determines whether the claim is directed to a judicial exception (such as an abstract idea, law of nature or natural phenomenon).  If this is the case, prong two determines whether the claim recites significantly more than just the exception.

[4] Berkheimer addressed prior art under prong two, but many other cases do so under prong one.

[5] As a result, a claim can be found to be unpatentably abstract because the recited invention is too close to prior art, but just because a claim includes some features not in the prior art does not automatically render it non-abstract. 

Epic Tech, LLC v. Fusion Skill, Inc. (S.D. Tex. 2021)

Electronic Gaming Patents Found Invalid under § 101

By Joseph Herndon --

In the U.S. District Court for the Southern District of Texas (Houston Division), Plaintiff Epic Tech, LLC (a seller of so-called "sweepstakes games") sued Defendants Fusion Skill, Inc. and Texas Wiz, LLC for infringement of U.S. Patent Nos. 9,589,423 and 8,545,315 with the distribution of gaming systems similar to Epic Tech's sweepstakes games.

The two patents at issue are related to the play of sweepstakes games.  The first patent (the '423 patent) is directed to a method of conducting a sweepstakes game in which a computer-based system operating the game immediately determines and credits a player's account with any prize earned before showing the user the results of the game.  According to Epic Tech, this method is beneficial because it "further reinforces to regulators that the prizes are predetermined and that there is no chance or skill involved in the simulated game."

This is important because gambling is illegal in many states, but various methods of evading this prohibition now exist, including converting a gambling-machine-like game into a lottery-like game.  In this method, the result of the game is not determined by random.  Instead, the system is loaded with a finite number of results—i.e., some number of winning tickets and a larger number of losing tickets—from which a ticket is randomly selected upon initiation of the game.  In other words, whereas in a traditional gambling machine game it would be mathematically possible for a player to lose—or win—one trillion times in a row, the precise number of winners and losers over the long run is predetermined in a lottery-based slot machine.  Further distinguishing these sweepstakes games from gambling-like games is the payment method.  Whereas a traditional gambling machine game is played by inserting a payment directly into the machine, a sweepstakes game might be initiated with a token that is given away for free along with an ostensibly unrelated purpose.  Because such a game does not technically require consideration on the part of the player, it can be defined as something other than gambling.

The second patent (the '315 patent) describes a method for conducting computer-based sweepstakes bonus games, or "game-in-games" in the patent's lexicology.  The '315 patent claims a method whereby the playing of a game-in-game is triggered automatically, without player interference, upon the selection of a winning ticket for the initial game.

The Defendants argued that each patent is invalid because it claims an abstract idea as proscribed by 35 U.S.C. § 101.

1.  The '423 patent

The '423 patent is directed to a method of dispensing prizes in an electronic sweepstakes game.  Its purported innovation is for the computer server on which the game is played to credit a player's account with the prize corresponding to the selected sweepstakes entry prior to displaying the results.  This innovation apparently makes the game more appealing to regulators.

Claim 1 of the '423 patent is set forth here:

1.  A method of providing a sweepstakes prize, the method comprising:
    a.  facilitating, by one or more processors, selection of a first plurality of sweepstakes tickets from a second finite plurality of sweepstakes tickets in response to a request from a user;
    b.  prior to a visual display of the results of the first plurality of tickets to a user account, determining, by the one or more processors, a prize associated with each of the first plurality of sweepstakes tickets and a total value for the prizes associated with the first plurality of sweepstakes tickets;
    c.  prior to a visual display of the results of the first plurality of tickets to a user account, crediting to an account for the user, by the one or more processors, the total prize value associated with the first plurality of sweepstakes tickets; and
    d.  providing to the user a visual display of the results of the first plurality of sweepstakes tickets.

The Court followed the two-step Alice test, asking first whether the patent is "directed to a patent-ineligible concept," such as an "abstract idea," and second whether, "if so, the particular elements of the claim, considered both individually and as an ordered combination, do not add enough to transform the nature of the claim into a patent-eligible application."

The Court stated that the '423 patent "flunks" Alice step one because it is directed to an abstract idea.  When computer-related patents are at issue, the critical distinction is whether the focus of the claims is on the specific asserted improvement in computer capabilities or, instead, on a process that qualifies as an abstract idea for which computers are invoked merely as a tool.

Here, the '423 patent claim merely deploys computers as a tool to implement a novel method of executing a sweepstakes game—specifically, in Epic Tech's own words, a new "method for awarding a sweepstakes prize developed by the patentee."  The '423 patent does not describe, and Epic Tech does not claim, any innovation in computer software; instead, the patent merely sets out a new method for using computers to award sweepstakes prizes.  Thus, the Court found the focus of the claims is not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools.

Because the '423 patent was found to be directed to an abstract idea, the Court proceeded to step two of the Alice test.

The Court viewed step two as deciding whether this case is closer to DDR Holdings or Electric Power.  In DDR Holdings, the court held valid a patent that described a novel method for Internet advertising because its claims specified how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink.  DDR Holdings, LLC v. Hotels.com, LP, 773 F.3d 1245 (Fed. Cir. 2014).

In Electric Power, the patent claimed a method of gathering and displaying information for electric power grid operators, but lacked details for how to accomplish those functions.  The claims alternatively were directed to the solution itself.  Electric Power Group, LLC v. Alstom, S.A., 830 F.3d 1350 (Fed. Cir. 2016).

The Court here found the '423 patent to be more like that in Electric Power.  The '423 patent was found to offer no "arguably inventive" method; rather, it simply instructs a computer to send information to another computer at an earlier step than it otherwise would in the normal course of a sweepstakes game.  The claims were found to lack meaningful details that would save them from § 101 destruction.

2.  The '315 patent

The '315 patent describes a method for operating sweepstakes bonus games, or "game-in-games."  The '315 patent describes its invention as "a method of playing a game-within-a-game" and "a method . . . providing a plurality of gaming terminals within a network."  Specifically, the '315 patent claims two networked computer terminals that simultaneously play a first game and, if the player wins the first game, trigger the playing of a second game.  Notably, the '315 patent does not claim any specific software or hardware necessary to implement this system.

Claim 1 of the '315 patent is set forth here:

1.  A computer-implemented method, comprising:
    a.  providing a plurality of gaming terminals linked together via a network, the plurality of gaming terminals comprising at least a first gaming terminal;
    b.  receiving a first request from a first player to play a first sweepstakes game on the first gaming terminal, wherein the first request qualifies the first player to be eligible to win an award associated with the first sweepstakes game;
    c.  in response to receiving the first request:
        i.  receiving a participation credit to play the first sweepstakes game;
        ii.  presenting an option to the first player to participate in a first sweepstakes game-in-game on the first gaming terminal so that the first player can play the first sweepstakes game and concurrently be eligible to win one or more prizes from the first sweepstakes game-in-game, wherein an outcome of the first sweepstakes game-in-game is independent of the outcome of the first sweepstakes game;
        iii.  receiving a second request; and
        iv.  in response to receiving the second request within a predetermined time limit, granting the first player eligibility to win one or more prizes from the first sweepstakes game-in-game;
    d.  triggering a play of the first sweepstakes game-in-game; and
    e.  notifying the first player of their eligibility to win one or more prizes from the play of the first sweepstakes game-in-game,
    wherein once the second sweepstakes game-in-game is triggered to play, the second sweepstakes game-in-game automatically plays on a server without input from the first gaming terminal.

Again, the Court found that the '315 patent "flunks" Alice step one.  Like the '423 patent, the '315 patent expressly describes itself as directed to methods, but does not claim any novel usage or configuration of computer hardware or software.

Next, under Alice step two, the Court found that the '315 patent cannot survive.  Here, the '315 patent merely describes a set of steps that could be performed by any computer—or a fast-moving store clerk—without adding any novel or inventive step.

The '315 patent claims a method of operating two games simultaneously in which the second game is triggered by certain conditions in the first game.  If the '315 patent described some technologically innovative mechanism by which the second game is triggered, it might well be inventive.  But, it does not.  Rather, it simply claims the idea of putting two computers next to each other and having the second computer initiate a game if the first computer produces a winning result.  That idea is abstract and thus unpatentable.

Epic Tech contended that the '315 patent's processes cannot be performed solely by humans because the patent claims a system that "independently control[s]" the game-in-game and "takes no input from the individual human players playing on the gaming terminals."

But the Court found that a human is perfectly capable of independently running a basic game of luck without taking input from a human player—in fact, that is what a casino's croupiers do every day.  In any event, the question is not whether the patent claims a process that cannot be performed by a human, but whether the patent claims a non-ordinary process.

Thus, Defendants' Motion for Partial Summary Judgment on Invalidity was granted as to both patents.

Epic Tech, LLC v. Fusion Skill, Inc. (S.D. Tex. 2021)
Memorandum and Order by U.S. District Judge Ellison