The Court of Appeals for the Federal Circuit ruled in February that it was wrong for a judge to rule that a patent was ineligible under the Alice standard because there were underlying factual disputes that could not be resolved on summary judgement. The case is Berkheimer v. HP Inc., case number 17-1437, in the U.S. Court of Appeals for the Federal Circuit.
Automated Tracking Solutions, LLC, (“ATS”) appealed findings of invalidity for failing to claim patent-eligible subject matter by the United States District Court for the Northern District of Georgia. In a decision rendered by the United States Court of Appeals for the Federal Circuit on February 16, 2018, the Court affirmed the district court’s finding that the subject matter was not patent-eligible.
Struggling to keep case law relating to subject matter eligibility organized? In February 2018, the United States Patent and Trademark Office (USPTO) released an improved Eligibility Quick Reference Sheet, providing patent practitioners with a useful tool for analyzing claims in view of 35 U.S.C. § 101 subject matter eligibility requirements.
Last week, the Federal Circuit held computer memory system patent claims not abstract and thus patent-eligible under Section 101, reversing a lower court dismissal of the case under Rule 12(b)(6). Visual Memory LLC v. NVIDIA Corp., No. 2016-2254, 2017 U.S. App. LEXIS 15187 (Fed. Cir. Aug. 15, 2017).
U.S. Patent No. 5,953,740 (“the ‘740 patent”) describes a memory system that can be tailored for use with multiple different processors without reducing performance. Id. at 3. The ‘740 patent explains that when “the [memory] system is turned on, information about the type of processor is used to self-configure the programmable operational characteristics.” Visual Memory, No. 2016-2254, slip op. at 4. “For example, depending on the type of processor, internal cache 16 can store both code and noncode data, or it can store only code data.” Id. at 4. Claim 1 recites the following:
In the recent decision of Clarilogic v. Formfree Holdings, the Federal Circuit invalidated the patentee’s (Formfree) claim to a “computer-implemented method for providing certified financial data indicating financial risk about an individual.” In sum, Claim 1 of Formfree’s patent recited (1) “electronically collecting financial account data” (e.g., historical transaction data) for an individual, (2) validating the data by “applying an algorithm engine” to identify exceptions that “indicate incorrect data or financial risk,” (3) confirming the exceptions by “collecting additional data and applying the algorithm engine to the additional data,” and (4) “generating, using a computer, a report from the financial account data and the valid exceptions.”
In recent years, software patents have come under fire from legislation (the American Invents Act) that has generally made patents easier to invalidate, and from court decisions (the Supreme Court’s decision in Alice v. CLS Bank and its progeny) that have made computer-implemented inventions more vulnerable to subject matter eligibility challenges. Some observers have concluded that software patents are no longer worth pursuing. We disagree. Although there are real challenges, and patents on some software or other computer-implemented inventions may now be quite difficult (or even impossible) to obtain or enforce, a well-written and well-prosecuted patent application can circumvent many of these obstacles.
To read our full advisory on software patent eligibility, please click here.
Two years after the Central District of California invalidated two 3-D animation patents under Section 101, the Federal Circuit reversed that court’s decision, finding that the lower court oversimplified the claims of a computer-related invention. McRO, Inc. v. Bandai Namco Games Am. Inc., Nos. 2015-1080, et al., 2016 U.S. App. LEXIS 16703 (Fed. Cir. Sep. 13, 2016) (opinion by Judge Reyna, joined by Judges Taranto and Stoll). While this case has stimulated discussion in the legal community, as being a ground-breaker for the patentability of software patents since the Supreme Court’s decision in Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014), the Federal Circuit’s McRO decision conforms with existing principles in post-Alice Section 101 law. While the Federal Circuit disagreed with the lower court in applying these principles to the facts of this case, the McRO decision does not change the core principle that patent claims directed to specific improvements in computer technology are patent-eligible.
The patents at issue in McRo (U.S. Patent Nos. 6,307,576 and 6,611,278) involve 3-D computer animation. Their specifications describe that in the relevant art, applying the appropriate data points for basic sound phonemes, e.g. ‘aah,’ ‘ee,’ or ‘oo,’ was usually done using a “keyframe” approach. McRO, 2016 U.S. App. LEXIS 16703 at *7. In a keyframe approach, an animator sets the morph weights at certain important times, between which a computer program “interpolates” (filling in the data points between those morph weights). Id. at *8. The patents state that this method requires the animator to manually set a tediously high number of keyframes, which is time consuming, and can be inaccurate. Id.
On August 22, 2016, Administrative Law Judge David Shaw of the International Trade Commission (“ITC” or “Commission”) issued his final initial determination (“the ID”) in Certain Portable Electronic Devices and Components Thereof, Inv. No. 337-TA-994. The ID invalidated all of the asserted claims for lack of patentable subject matter under 35 U.S.C. § 101, and terminated the investigation. This decision resulted from an early evidentiary hearing, conducted by order of the Commission within 100 days of its Notice of Institution under its “pilot program.” 81 Fed. Reg. 29307 (May 11, 2016).
The ID has implications related both to the implementation of the 100 day pilot program and continually developing Alice jurisprudence. For a more in depth discussion of those issues, please see our client alert here.
On August 3, 2016, the Patent Trial and Appeal Board issued a post-grant review decision that bears one striking similarity to its previous post-grant review decisions, namely invalidation of claims under Alice Corp. Pty. v. CLS Bank Int’l, further bolstering the salience of patent ineligibility challenges in post-grant proceedings.
In Netserv et al. v. Boxbee, Inc. (Case No. PGR2015-00009), the Board found the subject matter claimed in claims 1-21 of Boxbee Inc.’s U.S. Patent Number 8,756,166 (“the ‘166 patent”) to be ineligible for patent protection under 35 U.S.C. § 101. The Board first determined under Alice whether the claims of the ‘166 patent were drawn to an abstract idea. The Board found the ‘166 patent to describe “a bailment scheme using storage containers” or a method of keeping track of the storage locations of certain containers or items. Referring to cases on shipment tracking methods from federal district courts in New Jersey and California, as well as decisions from the Federal Circuit, the Board ruled that “bailment schemes [are] a long-prevalent economic practice, and constitute an abstract idea.”
Arming software-patentees with additional precedent in favor of eligibility for software patents post-Alice, the Federal Circuit on June 27, 2016 handed down its decision in BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, et al., No. 2015-1763, 2016 U.S. App. LEXIS 11687 (Fed. Cir. June 27, 2016), vacating the lower court’s decision. Below, Judge Barbara M. G. Lynn in the Northern District of Texas rejected patentee BASCOM’s argument that the software-based claims of U.S. Patent No. 5,987,606 contain an “inventive concept” in their ordered combination of limitations sufficient to satisfy the second step of the Supreme Court’s two-part Alice test. BASCOM, 2016 U.S. App. LEXIS 11687 at *1-2.
At the Federal Circuit, Judge Chen (joined by Judges Newman and O’Malley) described the invention disclosed by the ’606 Patent as an internet filtering tool, where a remote ISP server “receives a request to access a website, associates the request with a particular user,…applies the filtering mechanism associated with the particular user to the requested website[,]…[and] returns either the content of the website to the user, or a message to the user indicating that the request was denied.” Id. at *7. The specification of the ’606 Patent describes this filtering tool as an improvement over prior art filters because “no one had previously provided customized filters at a remote server.” Id. at *7-8 (emphases added); see also ’606 Patent at 2:36-65 (“Accordingly, there exists a need for a remote ISP server based method and system for filtering Internet content received by controlled access subscribers on an individually customizable basis.” (emphases added)).