Filewrapper® | A patent, trademark, and copyright law blog by MVS - Patentable subject matter

MVS Filewrapper® Blog: Federal Circuit Deems Software Patent Ineligible, Provides Little Certainty

Fri, 17 May 2013 14:20:00-0500

In its recent en banc decision in CLS Bank v. Alice Corp, the Federal Circuit has affirmed the finding of subject matter ineligibility of Alice Corp's method and software for management of risk in financial transactions through use of a third party intermediary. The ten-member panel produced seven different decisions, but did not produce any majority opinion. However, seven judges agreed that the method and computer-readable medium claims were patent ineligible. Additionally, eight of the ten determined that the claims should rise or fall under § 101 regardless of claim type.

In the plurality opinion written by Judge Lourie, the court examined Supreme Court precedent on the issue of patent eligible subject matter. Utilizing these precedents, the Federal Circuit proposed an "integrated approach" to § 101 problems—patents should not be allowed to preempt the fundamental tools of discovery; courts should avoid overly formalistic approaches to subject-matter eligibility that invites manipulation by patent applicants; courts should use a flexible, claim-by-claim approach that avoids rigid line-drawing. The analysis asks the following questions:

- Does the claimed invention fall into one of the four statutory classes (process, machine, manufacture, composition of matter)?

- Does the claimed invention meet a judicial exception to patent eligibility (law of nature, natural phenomena, abstract idea)?

- What is the fundamental concept at issue in the claim?

- Will the patenting of the idea preempt the whole idea or does the claim provide enough limitations to limit the scope of the patent grant?

- Is the human contribution more than a trivial addition or tangential, routine, well-understood, conventional limitation?

Under this analysis, the plurality determined that the abstract idea claimed in Alice Corp's patent was not rendered patent eligible because the added limitations were nothing more than "insignificant post-solution activity." They refused to reward the clever use of extravagant language to make the claims sound more limited with terms like "shadow record." Ultimately, the five judge plurality concluded that adding existing computer technology to an abstract idea does not render it patent eligible.

Judge Rader's opinion, concurring-in-part and dissenting-in-part, differed slightly in his proposed analysis for subject matter eligibility. He focused on whether the limitations in the claim restrict the abstract idea to a concrete reality or actual application of the idea. He noted that if the claim covers all practical applications of an abstract idea, it is not meaningfully limited. In contrast to Judge Lourie's opinion, Judge Rader found that when a claim is limited by the requirement for a computer, that is an important indication of patent eligibility. Ultimately, where the claim is tied to a computer in such a way that the computer plays a meaningful role in the performance of the claimed invention and the claim does not preempt virtually all uses of an underlying abstract idea, the claim is patent eligible. For these reasons, Judge Rader deemed Alice Corp's system claims to be patent eligible.

Judge Newman filed an opinion concurring with the majority that the claims should rise or fall together, but dissenting in her opinion that all of the claims are patent eligible. She indicated her concern over the uncertainty surrounding subject matter eligibility, which she believed was not remedied by this en banc decision. She proposed that the court return to the time-tested principles of patent law and abandon its failed § 101 ventures into abstractions, preemption, and meaningfulness. In response to the concern of preemption of experimentation and innovation, Judge Newman stated that the court should reaffirm the long-standing rule that study and experimentation are not infringement.

There continues to be uncertainty regarding the patentability of various types of software inventions. The fragmented opinions of the en banc panel indicate that despite their desire for a clear, consistent approach to section 101 that provides certainty and guidance to applicants and examiners alike, the issue of software patent eligibility is far from resolved.

Ultramercial LLC v. Hulu LLC

Mon, 26 Sep 2011 16:02:00-0500

The United States Court of Appeals for the Federal Circuit recently addressed the issue of whether a method of using advertising as a form of currency, to distribute copyrighted products over the internet, constituted patent-eligible subject matter. The court reversed the district court’s dismissal for lack of subject matter eligibility and found the claimed invention fell within patent-eligible subject matter under 35 U.S.C. §101’s definition of a “process.”

Ultramercial, LLC and Ultramercial, Inc.’s (collectively, “Ultramercial”) filed suit against Hulu, LLC (“Hulu”), YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”), in the United States District Court for the Central District of California. Ultramercial alleged infringement of its patent that claimed a method for distributing copyrighted products over the internet. The method allowed a consumer to freely obtain copyrighted products, such as songs, movies, and books, over the internet in exchange for viewing an advertisement. The copyrighted products were paid for by the advertiser. Hulu and YouTube were dismissed from the case, and WildTangent filed a motion to dismiss for failure to state a claim with patent-eligible subject matter. The district court dismissed Ultramercial’s patent infringement claims, finding that Ultramercial’s patent did not claim patent-eligible subject matter. Ultramercial appealed to the United States Court of Appeals, Federal Circuit.

The United States Court of Appeals, Federal Circuit, initially noted that the district court had dismissed Ultramercial’s claims for failure to claim patent-eligible subject matter without formally construing the claims. The court recognized that it had “never set forth a bright line rule requiring district courts to construe claims before determining subject matter eligibility.” Thus, the court held that claim construction may not always be necessary for 35 U.S.C. §101 analysis, and that this case did not require claim construction in light of the subject matter at issue.

The court then set forth the categories of subject matter eligible for patent protection under 35 U.S.C. §101:

[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.

35 U.S.C. §101. The court noted that the language of §101 clarifies that the categories of patent-eligible subject matter are no more than a “course eligibility filter” (quoting Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed.Cir. 2010)), and that subject matter eligibility is “merely a threshold check.” The court pointed out that there are only three categories of subject matter outside the eligibility constraints of §101: laws of nature; physical phenomena; and abstract ideas. The court further admitted that it, and the United States Supreme Court, have found it difficult to provide a precise definition for the patent-ineligible category of abstractness. While abstract ideas are patent ineligible, on the other hand, an application of an abstract idea may well be protected. Thus, the court gave “substantial weight to the statutory reluctance to list any new, non-obvious, and fully disclosed subject matter as beyond the reach of title 35.”

Addressing Ultramercial’s patent, the court found that it constituted a method of monetizing and distributing copyrighted products over the internet. Thus, as a method, Ultramercial’s claims satisfied §101’s definition of a “process” and fell within patent-eligible subject matter. The court determined that Ultramercial’s patent did not simply claim an abstract idea, i.e. advertising can serve as currency, but actually disclosed a practical application for this concept. The court also found several factors significant, for instance, the invention involved an extensive computer interface and solved problems with prior art banner advertising by requiring consumers to view advertisements before granting access to any copyrighted products.

The court ultimately held that “the ‘course eligibility filter’ of §101 should not be used to invalidate patents based on concerns about vagueness, indefinite disclosure, or lack of enablement, as these infirmities are expressly addressed by §112.” (quoting Research Corp., 627 F.3d at. 869; citing 35 U.S.C. §112). Thus, the court determined that Ultramercial’s claimed invention was not so “manifestly abstract as to override the statutory language of section 101,” because it was an improvement to prior art technology and a practical application of the general concept of utilizing advertising as currency. (quoting Research Corp., 627 F.3d at. 869). As a result, the court reversed the district court’s dismissal of Ultramercial’s patent claims for lack of subject matter eligibility and remanded for further proceedings.

Federal Circuit determines that method for optimizing dosing of medication is patent eligible

Tue, 21 Dec 2010 09:44:00-0500

The Federal Circuit on Friday looked at the issue of what constitutes an attempt to patent a natural phenomenon. In Prometheus Laboratories, Inc. v. Mayo Collaborative Services, the Federal Circuit determined that a method for optimizing the dosage of a medication was not directed to a natural phenomenon and therefore was patent-eligible subject matter within the meaning of § 101 of the Patent Act. This is the second case in as many weeks refining the analysis of patent-eligible subject matter in light of this summer's Supreme Court ruling in Bilski v. Kappos.

More details of Prometheus Labs., Inc. v. Mayo Collaborative Servs. after the jump.

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USPTO publishes interim guidance for assessing patentable subject matter post-Bilski

Tue, 27 Jul 2010 16:16:00-0500

In a Federal Register notice today, the USPTO has published interim guidance regarding how examiners are to assess whether an application's patent claims fall within the scope of patentable subject matter defined in § 101 in light of the Supreme Court's decision in Bilski. Many patent attorneys were concerned when the initial memo to examiners was released, suggesting the machine-or-transformation test was a burden-shifting mechanism and leaving it to an applicant who did not meet the test to prove the claims fell within § 101. The new guidance should allay these concerns somewhat, and comments are sought on both the guidelines and to provide examples of claims that are perceived to fall both within and without § 101.

The notice provides a background of the Bilski decision, particularly in the context of abstract ideas, given that was the basis for the Court finding Bilski's claims unpatentable. It then provides details on how examiners are to evaluate claims for § 101 compliance and provides factors to be considered. Of particular note is the following passage:

Section 101 is merely a coarse filter and thus a determination of eligibility under § 101 is only a threshold question for patentability. Sections 102, 103, and 112 are typically the primary tools for evaluating patentability unless the claim is truly abstract . . . .

The guidelines also provide how the examiner can make a § 101 rejection such that it can be responded to:

If a claim is rejected under § 101 on the basis that it is drawn to an abstract idea, the applicant then has the opportunity to explain why the claimed method is not drawn to an abstract idea. Specifically identifying the factors used in the analysis will allow the applicant to make specific arguments in response to the rejection if the applicant believes that the conclusion that the claim is directed to an abstract idea is in error.

The Notice lists various factors that an examiner can use to assist in the determination. On the whole, this approach should assist both applicants and examiners in addressing § 101 issues in a productive manner, although there will in most cases be room for argument regarding the relative weighing of the factors.

Click below for a listing of the factors identified in the notice as relevant to the § 101 analysis.

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Supreme Court: Business method patents survive, but barely; Bilski's claims unpatentable

Tue, 29 Jun 2010 10:53:00-0500

Yesterday, the Supreme Court decided Bilski v. Kappos, the most recent case at the Court probing the boundaries of patentable subject matter under § 101. Details of the underlying facts of the Bilski case may be found in our post on the Federal Circuit's en banc decision here.

All nine Justices agreed that Bilski's method claims were not patentable. All nine Justices also agreed the "machine-or-transformation" test, held by the Federal Circuit to be the exclusive test for whether method claims are patentable subject matter, was a useful test, but not the exclusive test for such claims. In this way, the outcome was similar to KSR. There, the Federal Circuit had adopted an exclusive test for the question of obviousness. The Supreme Court then held the test was useful, but not the exclusive test for obviousness. In addition, all members of the Court at least expressed skepticism that the "useful, concrete, tangible result" test from State Street was a viable test, with the majority stating "nothing in today's opinion should be read as endorsing interpretations of § 101 that the Court of Appeals for the Federal Circuit has used in the past," citing State Street, and the Justice Stevens opinion concurring in the judgment stating it would be a "grave mistake" to assume that all claims meeting this test are patentable.

The disagreement among the Justices came when considering the question of whether business methods as a more general category fall within the scope of patentable subject matter defined in § 101. More detail of that disagreement after the jump.

Update: The Court, in its last orders of the Term, has issued a GVR in two § 101 cases, the Prometheus case, relating to methods for measuring the level of certain drug metabolites in the system for the purpose of adjusting the drug administration level, and the Classen case, a nonprecedential opinion relating to a method of selecting a vaccination schedule by comparing alternatives and selecting the alternative with the lower likelihood of autoimmune disorders. The Federal Circuit will therefore have two opportunities to address § 101 in light of the Court's guidance sooner rather than later.

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Bilski decided

Mon, 28 Jun 2010 09:53:00-0500

This morning, the Supreme Court handed down its opinion in Bilski v. Kappos. The court affirmed the Federal Circuit's decision.

We'll have more detailed analysis soon.

To read the opinion, click here.

Highlights from oral arguments in Bilski v. Kappos

Wed, 11 Nov 2009 13:49:00-0500

On Monday, the Supreme Court heard oral argument in Bilski v. Kappos in an effort to determine the proper test to be applied to determine whether a claim is patentable subject matter under § 101. The oral argument transcript is available from the Court's website here.

Click below for our thoughts on the arguments and some of the more interesting quotes from the Justices' questioning.

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USPTO issues new section 101 guidelines for use until Supreme Court decides Bilski v. Doll

Fri, 28 Aug 2009 08:40:00-0500

This week the USPTO has issued new guidelines to patent examiners on how to handle § 101 patentable subject matter issues in light of the Federal Circuit's ruling in In re Bilski.

The guidelines are distilled into two flow charts and an instructional memo to examiners on how to conduct the analysis. Click below to review the materials in more detail.

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Supreme Court grants certiorari in Bilski

Mon, 01 Jun 2009 09:50:00-0500

In an order today, the Supreme Court agreed to hear an appeal in Bilski v. Doll regarding the patentability of method claims. Back in October, the Federal Circuit decided In re Bilski, adopting the "machine-or-transformation" test as the exclusive test to determine whether a method is drawn to patentable subject matter.

Bilski filed a petition for certiorari in January. Some thought the Court may take the case given its recent interest in the area of patentable subject matter, specifically the Laboratory Corp. v. Metabolite Laboratories, Inc. case where certiorari was dismissed as improvidently granted after oral argument was held. Although the Court did not render a decision in that case, three justices (Breyer, Stevens, and Souter) dissented from the dismissal of certiorari and would have held the claims directed to nonstatutory subject matter. SCOTUS Blog had the case among its petitions to watch for last Friday's conference, which compiles the cases the authors believe have a reasonable chance of being heard by the Court.

When the Laboratory Corp. case was pending, many believed the Court was looking to rein in abstract method claims. The granting of certiorari may be an indication that this is still the case, and the Court was simply waiting for the issue to be better presented. However, at least one of the previous votes to restrict the permissible scope of method claims, Justice Souter, will not be on the Court when the case is considered next term. Whether this will make a difference in the outcome remains to be seen. Of course, until the Court renders a decision in the case (probably not until sometime in 2010), the Federal Circuit's decision remains the law, and the machine-or-transformation test is the sole test for whether a method claim meets the requirements of § 101.

Marketing methods not patentable subject matter: no machine or transformation

Tue, 21 Apr 2009 14:05:00-0500

In a recent decision, the Federal Circuit applied the machine-or-transformation test from Bilski to affirm the rejection of all pending claims in a patent application by the Board of Patent Appeals and Interferences. The claims at issue related to methods of marketing products and "paradigms" for marketing software. The Board held all claims were not directed to patentable subject matter because they were directed to an "abstract idea."

The Federal Circuit, armed with the machine-or-transformation test, had little trouble affirming the Board. The court observed Bilski was dispositive on the method claims, as there was no "particular machine or apparatus," nor did the methods "transform any article into a different state or thing."

Similarly, the paradigm claims failed to recite statutory subject matter. The applicants argued the "company" recited in the claims was analogous to a "machine," and therefore statutory. The court disagreed, citing In re Nuijten, noting the claims recite no "concrete thing, consisting of parts, or of certain devices and combination of devices."

Of note, the court confirmed its rejection of the "useful, concrete, and tangible result" test from State Street. The parties had focused on that test in their briefing (which was complete before Bilski was decided).

More detail of In re Freguson after the jump.

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Bilski: No machine or transformation, no patentable method, at least for now

Mon, 03 Nov 2008 09:01:00-0500

As we reported Thursday, the Federal Circuit has decided In re Bilski, an en banc decision regarding the scope of patentable subject matter. Specifically, the court addressed what is necessary for a method to fall within the scope of patentable subject matter under § 101.

The court, after examining the relevant Supreme Court cases on the subject (such as Diehr, Benson, and Flook), the court adopted the "machine-or-transformation" test as the applicable test for patent-eligible methods. In so doing, the court rejected the Freeman-Walter-Abele test (regarding algorithms), the "useful, concrete, and tangible result" test articulated in State Street, and the "technological arts" test described in, for example, Ex parte Lundgren.

As stated by the court:

The machine-or-transformation test is a two-branched inquiry; an applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article.

The machine or transformation must also "impose meaningful limits on the claim's scope" and "must not merely be insignificant extra-solution activity."

The final vote was 9-3, with Judge Dyk writing a concurrence joined by Judge Linn, and Judges Newman, Mayer, and Rader authoring separate dissents.

More detail of In re Bilski and links to coverage from the media and blogs after the jump.

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Bilski decided

Thu, 30 Oct 2008 10:36:00-0500

The decision is available here. It adopts the "machine-or-transformation" test for patentable subject matter. As stated by the majority:

The machine-or-transformation test is a two-branched inquiry; an applicant may show that a process claim satisfies § 101 either by showing that his claim is tied to a particular machine, or by showing that his claim transforms an article.

Click below for some quotes from the majority opinion. We'll have a more complete analysis soon.

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Thursday at the Federal Circuit: In re Bilski oral arguments on scope of patentable subject matter

Tue, 06 May 2008 10:38:00-0500

This Thursday, the Federal Circuit will hear oral arguments en banc in In re Bilski (No. 2007-1130), a case that will help define the scope of patentable subject matter. Numerous amicus briefs have been filed in the case, and perhaps most interestingly, two of the amici, Bank of America and Regulatory DataCorp, have been granted permission to participate in the oral arguments.

More information about the case and its possible implications after the jump.

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Federal Circuit to consider overruling State Street en banc

Fri, 15 Feb 2008 10:35:00-0500

The Federal Circuit has, on its own motion, decided to hear a case en banc regarding the scope of patentable subject matter under § 101. The case, In re Bilski (No. 2007-1130), was argued before a panel of the court on October 1, 2007, and deals with the patentability of methods that involve only mental steps. Most interestingly, however, is that in the court's decision to hear the case en banc, the court asked the parties to brief the question:

Whether it is appropriate to reconsider State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998), and AT&T Corp. v. Excel Communications, Inc., 172 F.3d 1352 (Fed. Cir. 1999), in this case and, if so, whether those cases should be overruled in any respect?

Given that the court may reconsider State Street, this case could potentially result in a major shift in the scope of patentable subject matter. This decision comes on the heels of the court's decision earlier this week not to rehear In re Nuijten en banc, another case involving the scope of patentable subject matter. The petition to rehear that case en banc was supported by several amici.

To read the full order, click here. Patently-O has a good description of the BPAI's "informative" decision that is on appeal here. Click below for the full list of questions presented for en banc review.

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No en banc rehearing for case holding "signals" not patentable subject matter

Mon, 11 Feb 2008 14:07:00-0500

In a precedential order today, the Federal Circuit denied a petition for rehearing en banc in In re Nuijten. In that case, a panel of the court held that claims drawn to a "signal" did not fall into any of the statutory categories of patentable subject matter and were thus unpatentable under § 101. Judge Linn dissented from that decision, applying the § 101 framework from Diamond v. Chakrabarty, and would have held the claims to be drawn to statutory subject matter. You can read our full post about the panel's decision here.

Today Judge Linn authored the dissent again, this time joined by Judges Newman and Rader. As in his previous dissent, Judge Linn referred to Diamond v. Chakrabarty. He argued that under Chakrabarty, the signals claimed here were patentable subject matter. Not only does the decision conflict with Chakrabarty, he also asserted that a CCPA case, In re Breslow, also conflicted with the panel's decision. There, the court held that claims directed toward chemical compounds that were known to exist but could not be isolated because they were too unstable were considered "article[s] of manufacture" as defined by § 101. As stated by the CCPA:

It appears to us that the PTO would read into § 101 a requirement that compositions of matter must be stable—which is a relative term to say the least. We see no good reason to do so. It would appear that many compounds may find their greatest or even their sole utility in the fact that they are not stable. Certainly, in the invention at bar there is no reason to have the claimed compounds in a stable form so they can be bottled or tanked or otherwise stored. The preferred manner of using them is to produce them in situ, whereupon they exhibit their cross-linking activity, their only disclosed utility.

Here, the signals were "fleeting" or "transient," but Judge Linn argued that under Breslow, this did not matter for purposes of § 101.

Further, he argued the distinction between claims that were found to be drawn to patentable subject matter, namely claims to storage medium containing the signals at issue, and claims to the signals themselves, was "artificial at best."

It appears likely that a petition for certiorari to the Supreme Court will be filed in this case. This is further supported by the fact that in its last case dealing with § 101, Laboratory Corp. v. Metabolite Laboratories, Inc., the Court dismissed the petition for certiorari as improvidently granted, a decision that sparked three justices to dissent, showing that the Court may be looking for a case that presents a vehicle to rein in the scope of § 101.

To read the order in In re Nuijten, click here.