Making Sense of the Mess Caused by Alice, and Evaluating a Contingent Fee Patent Matter for Subject Matter Eligibility
As discussed in my prior post, What do Contingent Fee Patent Lawyers Look for When Considering Validity During Due Diligence?, patent lawyers must consider the question of subject matter eligibility under 35 USC 101 when evaluating a potential contingent fee patent matter.
The law surrounding subject matter eligibility under 35 USC 101 used to be clear-cut and well established compared to the law as it stands today. In 1980, the Supreme Court confirmed the historical intent of the law that “anything under the sun that is made by man” met the requirements for subject matter under 35 USC 101. Diamond v. Chakrabarty, 447 U.S. 303 (1980).
Thirty-four years later, the Supreme Court changed its mind. The Supreme Court's decision in Alice Corp. v. CLS Bank Int'l, 134 S.Ct. 2347 (2014) introduced a two-step test:
(1) Is the claimed invention directed to an abstract idea?
(2) If so, then is there an "inventive concept" that transforms the claim into a patent-eligible application of the abstract idea?
This test has complicated the analysis of subject matter eligibility as federal district courts, the Federal Circuit, and the USPTO have all tried to understand and apply it.
As the Federal Circuit decided different cases under 35 USC 101 and Alice, they issued many decision further analyzing and applying Alice. These decisions include following handful finding the claims were (or might be) directed to eligible subject matter:
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) - Alice Step 1 Case; the idea was not abstract. The court found the claim was directed to a specific improvement to the way computers operate embodied in a self-referential database table.
McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016) - Alice Step 1 Case; the idea was not abstract. When looked at as a whole, the claim was found to be directed to a patentable, technological improvement over the existing, manual 3-D animation techniques using limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice.
DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) - Alice Step 2 Case; there was an "inventive concept." The claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks," and the claim accomplished the goal using an unconventional technique that "overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink."
BASCOM Global Internet Services v. AT&T Mobility, 827 F.3d 1341 (Fed. Cir. 2016) - Alice Step 2 Case; there was an "inventive concept." Website filtering using known computer components but arranging the system in a unconventional way.
Berkheimer v. HP INC., 881 F.3d 1360 (Fed. Cir. 2018) - Patent eligibility is a question of law, but there are factual questions underlying the 35 USC 101 inquiry. "Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination. Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional."
Based on these and other decisions, the USPTO formulated its guidance. Still, the state of the law is not as clear as it should be. See, e.g., Gene Quinn, ”Unintelligible and Irreconcilable: Patent Eligibility in America,” IPWatchdog (November 4, 2018).
In an attempt to make some sense out of Alice and the subsequent cases, one could come up with a synthesized outline to help analyze claims under 35 USC 101. One such outline may look like this:
Alice Step 1 – Is the claimed invention directed to an Abstract Idea? See Enfish and McRO. If not, it's eligible subject matter. If so, proceed to Alice Step 2 to look for an "inventive concept." Generally, a court may be convinced the invention is not abstract if there is a new component or process involved beyond “off the shelf” parts or processes. Still further:
Does the Invention Improve the Functioning of a Computer? If the claimed invention improves the functioning of the computer itself or an existing technological process, then it may not be "abstract." Furthermore, the claimed invention does more than merely organize existing information into a new form or carry out a fundamental economic practice.
Preempt vs. Specific. Second, if the claims are directed to a specific embodiment or form of the invention as to avoid preempting the abstract idea, then it helps show the claim is not directed to an abstract idea. The specific structure of the claimed invention would prevent broad preemption of an abstract idea, and the claim is not broad enough to cover all possible approaches of accomplishing the abstract idea.
Technical Improvement (To Computer or Technological Art)? If the claimed invention is directed to an improvement of existing technology and the specification teach that the claimed invention operates differently than other conventional prior art solutions and achieves specific benefits over the prior art technology, it weighs against a finding the claim is directed to an abstract idea. Furthermore, a claim is less likely to be held abstract to the extent the claims provide a technical solution to a technical problem through unconventional claimed steps or hardware components that improves the existing technology or process.
Alice Step 2 – If Abstract, is there an “Inventive Concept”? See DDR and BASCOM. If the claim is directed to an “abstract” idea, it still may be patentable if there is an “inventive concept” that transforms the claim into a patent-eligible application of the abstract idea. The “inventive concept” may arise in one or more of the individual claim limitations or the ordered combination of the limitations.
Individual Elements. To the extent specific individual elements of the claim are not well-known or generic computer components, it weighs in favor of a finding that there is an "inventive concept." If the Applicant's specification describes the components as "off the shelf," then it weighs against an "inventive concept" for that individual claim element. To the extent that too many of the individual elements are "off the shelf" for a finding of an "inventive concept," there still may be an inventive concept in the "ordered combination" of the elements.
Elements as an Ordered Combination. The elements must also be considered as an ordered combination.
Unconventional New Arrangement. The inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art. BASCOM (“The inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art. As is the case here, an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.”).
Non-Preemptive and Non-Trivial Technical Improvement? Does the non-conventional and non-generic arrangement of conventional computer components provide a specific technical solution or technical improvement over prior systems that does non-preempt all ways of performing the abstract idea and is not merely instructing someone to do an abstract idea on a computer?
In Berkheimer, the court emphasized the unconventional aspects of the claimed invention in finding a question of fact and denying summary judgment on 35 USC 101.
Different practitioners may come up with different variations of the above outline based on their reading of the law. Furthermore, applying facts to various interpretations of the law on a case-by-case basis is very subjective. Therefore, the results of cases under this framework may be seemingly random.
It is strange the analysis under 35 USC 101 for subject matter looks to improvements over what people have done before and whether or not it is unconventional. Different portions of the patent law are concerned with novelty (improvements) and non-obviousness (unconventionality). Could the Supreme Court have gotten Alice wrong, and confused subject matter eligibility with "rough justice" versions of 35 USC 102 and 35 USC 103?
There is hope for a more clear-cut analysis. Recently on September 24, 2018, at the Intellectual Property Owner's Association Annual Meeting, U.S. Patent and Trademark Office Director Andrei Iancu gave a speech on the state of 35 USC 101. Director Icanu stated:
Let me put this in my own words: How can a claim be novel enough to pass 102 and nonobvious enough to pass 103, yet lack an “inventive concept” and therefore fail 101? Or, how can a claim be concrete enough so that one of skill in the art can make it without undue experimentation, and pass 112, yet abstract enough to fail 101? How can something concrete be abstract?
These problems confound the most sophisticated practitioners in our patent system. People simply don’t know how to draw these distinctions. If something is not inventive, then invalidate it under 102 or 103. If something is indefinite, or too broad to be fully enabled or described, then invalidate it under 112.
We have decades of case law from the courts and millions of examinations at the PTO which guide us in our 102, 103, and 112 analyses. People know these standards and how to apply these well-defined statutory requirements.
Hopefully, in the future, both the USPTO and the courts will adopt this clear-cut framework for determining subject matter eligibility and patentability, or legislation will be passed addressing the uncertainty. Indeed, the IPO, AIPLA, New York Intellectual Property Law Association and Boston Patent Law Association all recently announced support for a legislative fix to Section 101. Until then, we must consider Alice, and its progeny need during due diligence on contingent fee patent matters.
For now, contingent fee patent lawyers and patent owners should analyze the current law to outline, identify, and amplify the aspects of their invention that are not “abstract” or indicate an “inventive concept” such as new technological improvements and/or unconventional features that go against what has been done before when analyzing and defending patents under the current law surrounding 35 USC 101.