Patenting Abstract Ideas: Technology, Turnstiles, and TransformationOctober 19, 2017

On October 18, the Federal Circuit again examined the existing bounds of the patentability of abstract ideas. InSmart Systems Innovations (SSI) v. Chicago Transit Authority, the Federal Circuit determined that SSI’s four patents claimed an abstract idea and were invalid. SSI’s patents were directed to a fare collection system for mass transit (e.g. bus, train, etc.). Instead of using a punch card, cash, or other tokens, the system relies on the use of a bank card, like a debit or credit card, to process, store, and track user fares.

Generally, to qualify as patentable subject matter, an invention must be a “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” (35 U.S.C. § 101 (2017)). However, this definition excludes laws of nature, natural phenomena, and abstract ideas. When determining whether an invention is patentable subject matter, the mere fact that the claims are directed to a law of nature, natural phenomena and/or abstract idea does not by itself render the claims unpatentable. Rather, the USPTO and the courts have a two-part test: the first step asks whether the claims are directed to a natural phenomenon, abstract idea, or law of nature. If the answer is yes, the second step asks whether the claims contain an inventive concept sufficient to transform the invention into a patent-eligible application. (Mayo Collaborative Servs. V. Prometheus Labs, Inc., 132 S.Ct. 1289 (2012);Alice Corp. v. CLS Bank Int’l, 134 S.Ct. 2107 (2013)). Without this inventive concept and transformation, the claims are not patentable subject matter.  

In SSI v. Chicago Transit Authority, the Federal Circuit found that “[t]he Asserted Claims are not directed to a new type of bankcard, turnstile, or database, nor do the claims provide a method for processing data that improves existing technological processes. Rather, the claims are directed to the collection, storage, and recognition of data. We have determined that claims directed to the collection, storage, and recognition of data are not [sic] directed to an abstract idea. . . Accordingly, the Asserted Claims are directed to an abstract idea. . . .” (Smart Sys. Innovations, LLC v. Chicago Transit Auth., No. 2016-1233, 2017 WL 4654964, at *6 (Fed. Cir. Oct. 18, 2017);citing Elec. Power Grp., LLC v. Alstrom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016),Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014),and Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1340 (Fed. Cir. 2017)).

The Federal Circuit implies that if the claims involved a new bankcard, turnstile or database, or used a method which improved on data processing, the claims would have been patentable subject matter. Similarly, the Federal Circuit has found that claims are directed to a new and useful technique—even if the subject matter of the technique is a patent-ineligible law of nature of abstract idea—the claims may be patent-eligible. (See Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1050–51 (Fed. Cir. 2016)). Relatedly, where the subject matter is directed to a natural phenomenon, courts look for “markedly different characteristics from any found in nature and one having the potential for significant utility.” (Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980)).

With this in mind, those seeking to receive patents on subject matter involving a natural phenomenon, law of nature, or abstract idea should try to draft claims such that some new feature or improvement or modification is readily identifiable in the claims. In other words, the technological improvement should be apparent (e.g. “new” bankcard or database). Alternatively, a technological improvement may be evidenced by an unconventional combination of components and/or methods. Where the subject matter falls within the life sciences, claims should ideally demonstrate markedly different characteristics from normally found in nature. The ability to point to such an improvement, new feature, and/or modification will help patentees avoid rejections for unpatentable subject matter during prosecution, and limit potential liabilities in future litigation.

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