Subject Matter Eligibility and Software Patents

1.

(Topic #5)
Subject Matter Eligibility
(35 U.S.C. § 101) and
Software Patents
2018 Sughrue Mion Training for
Korea Electronics Association (KEA)
Christopher J. Bezak
[email protected]

2. Disclaimer

This presentation is for educational purposes only, and
does not provide legal advice, or comment on the
application of US law or USPTO regulations to any
specific patent or application.
The views expressed herein are not necessarily those of
Sughrue Mion, PLLC or any of its clients.
2

3. Overview

1.
2.
3.
4.
5.
Introduction and History
Statistics and Current Environment
Eligibility Decisions
Proposals and USPTO Guidance
Conclusions

4.

1. Introduction and History

5. 35 U.S.C. § 101

• Whoever 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.
– July 19, 1952, ch. 950, 66 Stat. 797
– "conditions and requirements"
• 35 U.S.C. §§ 102, 103, and 112
5

6. Exceptions to 35 U.S.C. § 101

• The U.S. Supreme Court has interpreted statutory
categories of patent-eligible subject matter to
exclude:
– Laws of nature, natural phenomena, and abstract ideas
• Typically cover the basic tools and fundamental building blocks
of scientific and technological work, such as scientific
principles, naturally occurring phenomena, mental processes,
and mathematical algorithms of abstract concepts
• Called "Judicial Exceptions": subject matter U.S. courts have
found to be outside of, or exceptions to, the four statutory
categories of patent-eligible inventions
– Reason: monopolizing these tools by granting patent rights may
impede innovation, rather than promote innovation
("preemption")
6

7. Exceptions to 35 U.S.C. § 101

• Long-standing exceptions
– "While a scientific truth, or the mathematical
expression of it, is not a patentable invention, a novel
and useful structure created with the aid of knowledge
of scientific truth may be."
• Mackay Co. v. Radio Corp., 306 U.S. 86 (1939)
– "Phenomena of nature, though just discovered, mental
processes, and abstract intellectual concepts are not
patentable, as they are the basic tools of scientific and
technological work."
• Gottschalk v. Benson, 409 U.S. 63, 67 (1972)
7

8. Groundwork Triumvirate

• Gottschalk v. Benson, 409 U.S. 63 (1972)
– Method for converting binary-coded decimal (BCD) numerals into pure
binary numerals
– Ineligible exception: mathematical expression (algorithm) that would preempt use of the BCD concept
• Parker v. Flook, 437 U.S. 584 (1978)
– Method for computing "alarm limits" in catalytic conversion
– Ineligible exception: patent directed to the "alarm limits" themselves
• Diamond v. Diehr, 450 U.S. 175 (1981)
– Process for molding raw, uncured synthetic rubber into cured precision
products; claim recites the Arrhenius equation for reaction time during the
cure
– Eligible: "an application of a law of nature or mathematical formula to a
known structure or process"
8

9. One Test for Subject Matter-Eligibility

• State Street Bank and Trust Company v. Signature
Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998)
– "…the transformation of data, representing discrete dollar
amounts, by a machine through a series of mathematical
calculations into a final share price, constitutes a practical
application of a mathematical algorithm, formula, or
calculation, because it produces 'a useful, concrete and
tangible result'…"
• Useful: utility
• Concrete: repeatable, same result
• Tangible: practical application of judicial exception to produce a
real-world result
9

10. Another Test for Subject Matter-Eligibility

• Bilski v. Kappos, 561 U.S. 593 (2010)
– Risk mitigation / method of hedging losses in energy
– Machine-or-Transformation Test
• Tied to a "particular machine" or apparatus; or
• Transforms a particular article into a different state or thing
– Not the sole test for patent eligibility under 35 U.S.C. § 101
– Useful and important clue to determining patent-eligible
subject matter
10

11. Mayo

• Mayo Collaborative Srvcs. v. Prometheus Labs, Inc.,
132 S. Ct. 1289 (2012)
– Methods of administering a drug and measuring efficacy
for determining optimal dosage
1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated
gastrointestinal disorder, comprising:
(a) administering a drug providing 6-thioguanine to a subject having said immunemediated gastrointestinal disorder; and
(b) determining the level of 6-thioguanine in said subject having said immunemediated gastrointestinal disorder,
wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells
indicates a need to increase the amount of said drug subsequently administered to
said subject and
wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood
cells indicates a need to decrease the amount of said drug subsequently administered
to said subject.
11

12. Subject Matter-Eligibility Principles

• "'The Court has recognized, however, that too broad an interpretation of
this exclusionary principle could eviscerate patent law. For all inventions
at some level embody, use, reflect, rest upon, or apply laws of nature,
natural phenomena, or abstract ideas. Thus, in Diehr the Court pointed
out that "'a process is not unpatentable simply because it contains a law
of nature or a mathematical algorithm.'"' 450 U. S., at 187 (quoting Parker
v. Flook, 437 U. S. 584, 590 (1978)). It added that "an application of a law
of nature or mathematical formula to a known structure or process may
well be deserving of patent protection." Diehr, supra, at 187."
• "to transform an unpatentable law of nature into a patent-eligible
application of such a law, one must do more than simply state the law of
nature while adding the words 'apply it.'" See, e.g., Benson, supra, at 71–
72.
12

13. Subject Matter-Eligibility Principles

• "Those cases warn us against interpreting patent statutes in ways that
make patent eligibility "depend simply on the draftsman's art" without
reference to the "principles underlying the prohibition against patents for
[natural laws]." Flook, supra, at 593. They warn us against upholding
patents that claim processes that too broadly preempt the use of a natural
law. Morse, supra, at 112– 120; Benson, supra, at 71–72. And they insist
that a process that focuses upon the use of a natural law also contain
other elements or a combination of elements, sometimes referred to as
an "inventive concept," sufficient to ensure that the patent in practice
amounts to significantly more than a patent upon the natural law itself.
Flook, supra, at 594; see also Bilski, supra, at ___ (slip op., at 14) ("[T]he
prohibition against patenting abstract ideas 'cannot be circumvented by
attempting to limit the use of the formula to a particular technological
environment' or adding 'insignificant postsolution activity'" (quoting Diehr,
supra, at 191–192))."
13

14. Mayo Framework

• Step 1: Identify the exception
– Law of nature: relationship between concentration of metabolites in
the blood and likelihood that dosage will be ineffective
• Step 2: "What else is there in the claims before us?"
1. A method of optimizing therapeutic efficacy for treatment of an immune-mediated
gastrointestinal disorder, comprising:
(a) administering a drug providing 6-thioguanine to a subject having said immunemediated gastrointestinal disorder; and
(b) determining the level of 6-thioguanine in said subject having said immunemediated gastrointestinal disorder,
wherein the level of 6-thioguanine less than about 230 pmol per 8×108 red blood cells
indicates a need to increase the amount of said drug subsequently administered to
said subject and
wherein the level of 6-thioguanine greater than about 400 pmol per 8×108 red blood
cells indicates a need to decrease the amount of said drug subsequently administered
to said subject.
14

15. Alice

• Alice v. CLS, 134 S. Ct. 2347 (2014)
– Computerized scheme for mitigating "settlement risk" of a
party to a financial exchange defaulting on its obligation
33. A method of exchanging obligations as between parties, each party holding a credit record and a debit
record with an exchange institution, the credit records and debit records for exchange of predetermined
obligations, the method comprising the steps of:
(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held
independently by a supervisory institution from the exchange institutions;
(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and
shadow debit record;
(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each
respective party's shadow credit record or shadow debit record, allowing only these transactions that do
not result in the value of the shadow debit record being less than the value of the shadow credit record at
any time, each said adjustment taking place in chronological order, and
(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to
exchange credits or debits to the credit record and debit record of the respective parties in accordance
with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time
invariant obligations placed on the exchange institutions.
15

16. Subject Matter-Eligibility Principles

'"We have long held that this provision contains an important implicit exception: Laws of
nature, natural phenomena, and abstract ideas are not patentable.' Association for Molecular
Pathology v. Myriad Genetics, Inc., 569 U. S. ___, ___ (2013) (slip op., at 11) (internal
quotation marks and brackets omitted). We have interpreted §101 and its predecessors in
light of this exception for more than 150 years. Bilski, supra, at 601–602; see also O'Reilly v.
Morse, 15 How. 62, 112–120 (1854); Le Roy v. Tatham, 14 How. 156, 174–175 (1853)."
"We have described the concern that drives this exclusionary principle as one of preemption. See, e.g., Bilski, supra, at 611–612 (upholding the patent "would pre-empt use of
this approach in all fields, and would effectively grant a monopoly over an abstract idea").
Laws of nature, natural phenomena, and abstract ideas are " '"the basic tools of scientific and
technological work."'" Myriad, supra, at ___ (slip op., at 11). "[M]onopolization of those tools
through the grant of a patent might tend to impede innovation more than it would tend to
promote it," thereby thwarting the primary object of the patent laws. Mayo, supra, at ___
(slip op., at 2); see U. S. Const., Art. I, § 8, cl. 8 (Congress "shall have Power . . . To promote
the Progress of Science and useful Arts"). We have "repeatedly emphasized this . . . concern
that patent law not inhibit further discovery by improperly tying up the future use of " these
building blocks of human ingenuity. Mayo, supra, at ___ (slip op., at 16) (citing Morse, supra,
at 113)."
16

17. Warning

• "At the same time, we tread carefully in construing this
exclusionary principle lest it swallow all of patent law. Mayo,
566 U. S., at ___ (slip op., at 2). At some level, "all inventions .
. . embody, use, reflect, rest upon, or apply laws of nature,
natural phenomena, or abstract ideas." Id., at ___ (slip op., at
2). Thus, an invention is not rendered ineligible for patent
simply because it involves an abstract concept. See Diamond
v. Diehr, 450 U. S. 175, 187 (1981). "[A]pplication[s]" of such
concepts "'to a new and useful end,'" we have said, remain
eligible for patent protection. Gottschalk v. Benson, 409 U. S.
63, 67 (1972)."
17

18. Alice Framework

• "Accordingly, in applying the §101 exception, we must distinguish between
patents that claim the "'buildin[g] block[s]'" of human ingenuity and those
that integrate the building blocks into something more, Mayo, 566 U. S., at
___ (slip op., at 20), thereby "transform[ing]" them into a patent-eligible
invention, id., at ___ (slip op., at 3). The former "would risk
disproportionately tying up the use of the underlying" ideas, id., at ___
(slip op., at 4), and are therefore ineligible for patent protection. The latter
pose no comparable risk of pre-emption, and therefore remain eligible for
the monopoly granted under our patent laws."
– Step A: Are the claims directed to a patent-ineligible concept?; and
– Step B: Do the claims recite elements sufficient to transform the abstract idea
into patent-eligible subject matter?
• Sufficient to ensure the patent amounts to more than a patent on the idea itself
• Supply a "new and useful" application of the idea
• Improvement in a technology or technical field
18

19. Step A

• Are the claims directed to a patent-ineligible concept?
– "In any event, we need not labor to delimit the precise contours of the
'abstract ideas' category in this case. It is enough to recognize that
there is no meaningful distinction between the concept of risk hedging
in Bilski and the concept of intermediated settlement at issue here.
Both are squarely within the realm of "abstract ideas" as we have used
that term."
• "I shall not today attempt further to define the kinds of
material I understand to be embraced within that shorthand
description ["hard-core pornography"], and perhaps I could
never succeed in intelligibly doing so. But I know it when I see
it, and the motion picture involved in this case is not that."
– Jacobellis v. Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring)
(emphasis added)
19

20. Step B

• Do the claims recite elements sufficient to transform the
abstract idea into patent-eligible subject matter?
– "[w]e must examine the elements of the claim to determine whether
it contains an 'inventive concept'"
– Search for "additional features"
• More than conventional steps (Mayo)
• More than a general-purpose computer (Benson)
• More than implementation of a principle, concept, or idea on a machine
or in a specific technological environment (Flook, Bilski)
• Improve existing technology (Diehr)
– Implementing an abstract idea on a computer is not enough to
transform that idea into patentable subject matter
• Claims patent-ineligible because they (i) "do not, for example, purport to improve
the functioning of the computer itself," (ii) "[n]or do they effect an improvement in
any other technology or technical field." Alice, 134 S. Ct. at 2360.
20

21. Alice: Two-Part Test

21

22. Categories of Abstract Ideas

• Mathematical algorithms or mental steps (see Gottschalk v.
Benson, 409 U.S. 63, 64 (1972))
– An "algorithm" is defined by the Supreme Court as "[a] procedure for
solving a given type of mathematical problem" (see Benson, 409 U.S.
at 65);
– "Mental steps" that "can be performed [solely] in the human mind, or
by a human using a pen and paper" (see CyberSource Corp v. Retail
Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011) (stating that
"[m]ethods which can be performed entirely in the human mind are
unpatentable because . . . methods which can be performed entirely in
the human mind are the types of method that embody the 'basic tools
of scientific and technological work'"); and
– Mathematical formulas — a subset of "mathematical algorithm[s]"
(see Parker v. Flook, 437 U.S. 584 (1978)).
22

23. Categories of Abstract Ideas

• "[F]undamental economic practice[s] long prevalent [i.e.,
preexisting] in our system of commerce" — a new form of an
"abstract idea" created by the Supreme Court in Bilski v.
Kappos, 561 U.S. 593, 604 (2010)
– Examples of "fundamental economic practices" include (1) "risk hedging" in
Bilski, and (2) "intermediated settlement" in Alice Corp. v. CLS Bank Int'l, 134 S.
Ct. 2347, 2356 (2014);
– Business practices or methods of organizing human activity — a subset of
Bilski's "abstract idea" created by the Supreme Court in Alice; and
– "Covered business method patent" under Leahy-Smith America Invents Act,
Pub. L. No. 112-29, 125 Stat. 284 (2011) ("AIA") § 18(d)(1): patent that "claims
a method or corresponding apparatus for performing data processing or other
operations used in the practice, administration, or management of a financial
product or service, except that the term does not include patents for
technological inventions." 37 C.F.R. § 42.301(a).
23

24. Questions Remain: Step A

• What is an "abstract idea"?
– Digital signal processing, video encoding, etc.
• RecogniCorp, LLP v. Nintendo Co., 855 F.3d 1322, 1327 (Fed. Cir. 2017)
– Building block of human ingenuity?
• "the basic tools of scientific and technological work" and (2) "part of the
storehouse of knowledge of all men . . . free to all men and reserved
exclusively to none" (Benson, 409 U.S. at 67)
• Alice provides examples, but no definition
– (1) fundamental economic practices ("the concept of intermediated
settlement is 'a fundamental economic practice long prevalent in our system
of commerce'")
– (2) organizing human activity ("hedging is a longstanding commercial
practice") (Bilski)
– (3) mathematical formulas
• When are claims "directed to" an abstract idea?
24

25. Questions Remain: Step B

• Does the search for "significantly more"
require determination of novelty?
– "[w]e must examine the elements of the claim to
determine whether it contains an 'inventive
concept'"
– "well-understood, routine, conventional
activit[ies]"
• Unconventional limitations, which might not be novel
or which might be obvious
• Avoid mere computer implementations of abstract
concepts
25

26.

2. Statistics and Current Environment

27. Uncertainty

"The line between a patentable process and an unpatentable principle is not
always clear."
– Tilghman v. Proctor, 102 U.S. 707 (1880)
"The "line between a patentable 'process' and an unpatentable principle [i.e.,
'abstract idea'] is not always clear."
– Flook, 437 U.S. at 589
"I concede that the category of nonpatentable '[p]henomena of nature,' like the
categories of 'mental processes' and 'abstract intellectual concepts,' is not easy to
define. . . After all, many patentable inventions rest upon its inventor's knowledge
of natural phenomena; many 'process' patents seek to make abstract intellectual
concepts workably concrete; and all conscious human action involves a mental
process."
– Lab. Corp. of Am. Holdings v. Metabolite Laboratories, Inc., 548 U.S. 124, 134 (2006)
(Breyer, J., dissenting))
"The Court . . . never provides a satisfying account of what constitutes an
unpatentable abstract idea."
– Bilski, 561 U.S. at 621 (Stevens, J., concurring)
27

28. Predicted Unpatentability

• "If all of these claims, including the system
claims, are patent-ineligible, this case is the
death of hundreds of thousands of patents,
including all business method, financial
system and software patents as well as many
computer-implemented and
telecommunications patents."
– CLS Bank Int'l v. Alice Corp. Pty. Ltd., 717 F.3d
1269, 1292-313 (Fed. Cir. 2013) (Moore,
dissenting)
28

29. Patent Eligibility at the Federal Circuit

• Post-Alice: 71 rulings on patent-eligibility
Digitech
Planet Bingo †
buySAFE
Ultramercial
DDR Holdings
Ambry
Content Extraction
Allvoice †
OIP Tech.
Sequenom
Internet Patents
IV v. Cap. One Bank
Versata *
Vehicle Intelligence †
Mortgage Grader
In re Smith *
Genetic Tech.
In re Brown * †
Enfish
TLI Comms.
BASCOM
Rapid Lit. Mgmt.
Shortridge †
Lendingtree †
Electric Power Group
In re Chorna * †
TDE Petroleum †
McRO
Affinity Labs. v. Amazon
Affinity Labs. v. DirecTV
IV v. Symantec
FairWarning
Synopsys
Amdocs
Tranxition †
Ameranth *
Trading Tech. v. CQG †
Evolutionary Intel. †
Smartflash †
IV v. Cap. One Financial
IV v. Erie Indemnity I
Thales Visionix
In re Salwan * †
Clarilogic †
Coffelt †
Mentor Graphics
West View Research †
RecogniCorp
Easyweb †
Credit Acceptance
Cleveland Clinic
Prism Tech. †
Audatex †
Visual Memory
Return Mail
Secured Mail
Smart Systems
Two-Way Media
IV v. Erie Indemnity II †
Inventor Holdings
Finjan v. Blue Coat
Core Wireless
Move v. Real Estate Alliance †
Berkheimer v. HP
Ziuli v. Google LLC * †
Aatrix Software
Automated Tracking Sol. †
Exergen Corp. v. Kaz USA †
IV v. Symantec Corp. †
Vanda Pharmaceuticals
SAP America (May 15, 2018)
Source: Chart of subject matter eligibility court decisions (updated May 3, 2018) https://www.uspto.gov/patent/laws-and-regulations/examination-policy/subject-matter-eligibility
Bold text indicates decision identifying claims as eligible
Green text indicates decision identifying natural product, natural phenomenon, or law of nature
* Case appealed from USPTO † Non-precedential decision
(Rule 36 affirmances not shown)
29

30. Patent Eligibility at the Federal Circuit

Decisions Since Alice
13; 14%
Subject Matter
Ineligible
10; 11%
Rule 36
Affirmance
71; 75%
Subject Matter
Eligible
30

31. Patent Eligibility at the Federal Circuit

• Only 9 (precedential) decisions (subject
matter eligible)
31

32. Patent Eligibility at the PTAB

Decisions Since Alice
189; 15%
Subject Matter Ineligible
Subject Matter Eligible
1071; 85%
Source: Anticipat Research
32

33. Patent Eligibility at the PTAB

• Consistent decline of reversals
Source: Anticipat Research
33

34. Patent Eligibility at the PTAB

• Very sharp decline of reversals
Source: BilskiBlog
34

35.

3. Eligibility Decisions

36. Post-Alice Decisions (Eligible, Software)

• Step A (abstract idea)
–
–
–
–
–
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016)
McRO, Inc. v. Bandai Namco Games America, Inc., 837 F.3d 1299 (Fed. Cir. 2016)
Thales Visionix Inc. v. United States, 850 F.3d 1343 (Fed. Cir. 2017)
Visual Memory LLC v. Nvidia Corp., No. 2016-2254, 2017 WL 3481288 (Fed. Cir. 2017)
Trading Technologies International, Inc., v. CQG, Inc., No. 2015-1616, 2017 WL 192716
(Fed. Cir. Jan. 2017) (non-precedential)
– Finjan, Inc. v. Blue Coat Systems, Inc., No. 2016-2520, 2018 WL 341882 (Fed. Cir. 2018)
– Core Wireless Licensing v. LG Elecs., Inc., No. 2016-2684, 2017-1922 (Fed. Cir. 2018)
• Step B (significantly more)
– DDR Holdings v. Hotels.com, 773 F.3d 1245 (Fed. Cir. 2014)
– Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016)
– Amdocs (Israel) Limited, v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. 2016)
36

37. Step 2A: No Abstract Idea (Enfish)

• Logical model for computer database
– Model of data for database explaining how the various elements of
information are related to each other
• Includes all data entities in a single table, with column definitions provided by rows
in that same table
• Prior art relational model: each entity (i.e., each type of thing) that is modeled is
provided in a separate table
• Technological Improvement / Improved Computer Function
– "a specific improvement to the way the computers operate, embodied in the
self-referential table," i.e., "an improvement of an existing technology [that] is
bolstered by the specification's teachings that the claimed invention achieves
other benefits over conventional databases, such as increased flexibility, faster
search times, and smaller memory requirement"
• Enfish, 822 F.3d at 1335
37

38. Step 2A: No Abstract Idea (McRO)

• Automating part of a preexisting 3-D animation to synchronize speech
with an animated character
– Claims recite evaluating data concerning the animation images against certain
rules to generate data used for lip synchronization
– Specification describes problems with the prior art that performed the lip
synchronization manually
• Technological Improvement / Improved Computer Function
– (i) specific limitations regarding a set of rules and, when viewed as a whole, are directed
to (ii) a "technological improvement over the existing, manual 3–D animation
techniques" that uses "limited rules in a process specifically designed to achieve an
improved technological result in conventional industry practice" (McRO, 837 F.3d at 1315)
38

39. Step 2A: No Abstract Idea (Thales)

• Directed to an inertial tracking system for tracking the motion of an object
relative to a moving reference frame
– Claims recite inertial sensors directly measure the gravitational field in the
platform frame
– Specification describes problem that inertial sensors measured motion relative
to earth, and the error-correcting sensors on the tracked object measured
position relative to the moving platform
• Technological Improvement / Improved Computer Function
– Thales: "systems and methods that use inertial sensors in a non-conventional
manner to reduce errors in measuring the relative position and orientation of
a moving object on a moving reference frame"
• Thales, 850 F.3d at 1349
39

40. Step 2A: No Abstract Idea (Visual Memory)

• Programmable operational characteristics of memory caches tailored for
use with multiple different processors
– Specification describes the prior art problem: "the need to design a separate
memory system for each type of processor, which proved to be costly and
inefficient"
– Specification describes the improvement: selectively defining functions of
caches based on the processor type to "achieve or exceed the performance of
a system utilizing a cache many times larger than the cumulative size of the
subject caches"
• Technological Improvement / Improved Computer Function
– "a technological improvement: an enhanced computer memory system"
• Visual Memory, No. 2016-2254, 2017 WL 3481288 at *4
40

41. Step 2A: No Abstract Idea (Trading Techs)

User interface for electronic trading of stock, bonds,
futures, options and similar products
– Specification describes problem: "[W]hen a trader
attempts to enter an order at a particular price, but
misses the price because the market moved before the
order was entered and executed. It also sometimes
occurred that trades were executed at different prices
than intended, due to rapid market movement."
– Specification describes solution: "[B]id and asked prices
are displayed dynamically along the static display, and
the system pairs orders with the static display of prices
and prevents order entry at a changed price."
Technological Improvement / Improved Function
– "solves problems of prior graphical user interface
devices … in the context of computerized trading [ ]
relating to speed, accuracy and usability …
improvements in existing graphical user interface
devices that have no 'pre-electronic trading analog'"
Trading Techs., No. 2015-1616, 2017 WL 192716 at *2
41

42. Step 2A: No Abstract Idea (Finjan)

• Virus scanning: providing security by scanning a downloadable
and attaching results of scanning to the downloadable
("security profile")
– Problem: code-matching virus scans limited to recognizing previously
identified viruses by comparison to database
– Solution: behavior-based scans protect against unknown viruses, and
"obfuscated" code (cosmetically modified viruses) to enable more
flexible and nuanced virus filtering by comparison between a local
security policy and the attached security profile
• Technological Improvement / Improved Computer Function
– "a new kind of file that enables a computer security system to do
things it could not do before … a non-abstract improvement in
computer functionality, rather than the abstract idea of computer
security"
• Finjan, No. 2016-2520, 2018 WL 341882, slip op. at 8
42

43. Step 2A: No Abstract Idea (Core Wireless)

Improved user interface for summarizing and presenting information showing only a limited
set of information
–
Improved efficiency by bringing together "a limited list of common functions and commonly
accessed stored data," accessed from the main menu; enables to see most relevant data or functions
"without actually opening the application" and "saves the user from navigating to the required
application, opening [ ], and then navigating within that application to enable [ ] data of interest to
be seen or a function [ ] to be activated"
Technological Improvement / Improved Computer Function
–
"an improved user interface for computing devices, not the abstract idea of an index … a particular
manner of summarizing and presenting information in electronic devices … a specific manner of
displaying a limited set of information to the user, rather than using conventional user interface
methods to display a generic index on a computer … an improvement in the functioning of
computers, particularly those with small screens"
Core Wireless, No. 2016-2684, 2017-1922, slip op at 9-10
43

44. Step 2B: Significantly More (DDR)

Generating a composite web page of elements from a "host" website and third-party content
(e.g., merchant)
–
–
Solves the problem of user being directed away from host webpage when clicking on a link for a
merchant's product
Host webpage can retain visitor traffic by displaying product information by correlating host website
with commerce object
Technical Solution to a Technical Problem
–
Claims (i) do not merely recite "the performance of some business practice known from the preInternet world" previously disclosed in Bilski and Alice, and instead (ii) provide a technical solution to
a technical problem unique to the Internet, i.e., a "solution [] necessarily rooted in computer
technology in order to overcome a problem specifically arising in the realm of computer networks"
DDR, 773 F.3d at 1257
44

45. Step 2B: Significantly More (Bascom)

• Individually customized filtering tool for Internet
browsing at a remote Internet Service Provider (ISP)
server
– Applies the filtering mechanism associated with the particular user to
the requested website to determine whether the user associated with
that request is allowed access to the website
– Directed to filtering content on the Internet (Step 2A)
• Technical Solution to a Technical Problem
– The "claims, when considered as "an ordered combination,"
"transform the abstract idea of filtering content into a particular,
practical application of that idea," i.e., the "installation of a filtering
tool at a specific location, remote from end-users, with customizable
filtering features specific to each end user"
• Bascom, 827 F.3d at 1350
45

46. Step 2B: Significantly More (Amdocs)

• Collection, merging, reporting of data from components arrayed in a
distributed architecture
– Specification describes billing problem faced by ISPs, and solution of reduced data flows
and the possibility of smaller databases
– "Importantly, the distributed data gathering, filtering and enhancements performed in
the system 100 enables load distribution. Granular data can reside in the peripheries of
the system 100, close to the information sources. This helps avoids [(sic)] reduce
congestion in network bottlenecks but still allows the data to be accessible from a
central location. In previous systems, all the network information flows to one location,
making it very difficult to keep up with the massive record flows from the network
devices and requiring huge databases."
• Technical Solution to a Technical Problem
– Amdocs: an "inventive concept" is found because, like DDR and Bascom, Amdocs' claims
"entail[] an unconventional solution (enhancing data in a distributed fashion) to a
technological problem (massive record flows which previously required massive
databases)" and "improve the performance of the system itself"
• Amdocs, 841 F.3d at 1302
46

47. Observations

• Clear identification of problem faced by prior art (Step 2A, 2B)
• Clear identification of benefits of the claimed solution or
improvement over the prior art (Step 2A, 2B)
• Strong identification of technology (Step 2A, 2B)
• Practical application of the solution or improvement to
produce the benefit, not mere claimed recitation of the idea
(Step 2B)
• Technical solution to a technical problem (using a combination
of conventional elements) (Step 2B)
47

48. Composition of CAFC Panels

• Not listed: Prost, Lourie, Clevenger, Schall, Bryson
Judge
DDR Enfish
Wallach
O
Mayer
O
Chen
O
Moore
Bascom
McRO
Amdocs
Core
Wireless
Trading
Techs
O
O
O
O
O
Thales
Visual
Memory
Finjan
O
O
O'Malley
O
O
O
Dyk
O
Linn
O
Hughes
O
Newman
O
Stoll
Taranto
Reyna
Plager
X
O
O
O
O
O
O
O
O
O
O
X
O
48

49.

4. Proposals and USPTO Guidance

50. Big Mess?

• Will Congress act to clarify 35 U.S.C. § 101?
• Will the Federal Circuit clarify 35 U.S.C. § 101?
– No en banc decisions pending
• Will the Supreme Court clarify 35 U.S.C. § 101?
– Is Alice clear?
– Is Alice merely being misapplied by the Federal Circuit?
• USPTO § 101 Guidelines
– Can patentees rely upon the USPTO?
• District Court
– Rule 12(b)(6) and Rule 12(c) motions continue
– Jurisdiction dependent
• Delaware, Texas, and Virginia
50

51. Intellectual Property Owners (IPO) Proposal

§101(a) Eligible Subject Matter
Whoever invents or discovers, any useful process, machine, manufacture,
composition of matter, or any useful improvement thereto, shall be entitled to a
patent for a claimed invention thereof, subject only to the exceptions, conditions,
and requirements set forth in this Title.
§101(b) Sole Exception to Subject Matter Eligibility
A claimed invention is ineligible under subsection (a) if and only if the claimed
invention as a whole, as understood by a person having ordinary skill in the art to
which the claimed invention pertains, exists in nature independently of and prior
to any human activity, or exists solely in the human mind.
§101(c) Sole Eligibility Standard
The eligibility of a claimed invention under subsections (a) and (b) shall be
determined without regard as to the requirements or conditions of sections 102,
103, and 112 of this Title, the manner in which the claimed invention was made or
discovered, or the claimed invention's inventive concept.
51

52. American Bar Association (ABA) Proposal

§101(a) Eligible Subject Matter
Whoever invents or discovers any useful process, machine, manufacture, or composition of
matter, or any useful improvement thereof, [[may obtain]] shall be entitled to a patent
thereof, [[subject to the conditions, and requirements of this Title]] on such invention or
discovery, absent a finding that one or more conditions or requirements under this title have
not been met.
§101(b) Exception
A claim for a useful process, machine, manufacture, or composition of matter, or any useful
improvement thereof, may be denied eligibility under this section 101 on the ground that the
scope of the exclusive rights under such a claim would preempt the use by others of all
practical applications of a law of nature, natural phenomenon, or abstract idea. Patent
eligibility under this section shall not be negated when a practical application of a law of
nature, natural phenomenon, or abstract idea is the subject matter of the claims upon
consideration of those claims as a whole, whereby each and every limitation of the claims
shall be fully considered and none ignored. Eligibility under this section 101 shall not be
negated based on considerations of patentability as defined in Sections 102, 103 and 112,
including whether the claims in whole or in part define an inventive concept.
52

53. American Intellectual Property Law Association (AIPLA) Proposal

35 U.S.C. §101—Inventions Patentable
§101(a) Eligible Subject Matter
• Whoever invents or discovers any useful process, machine, manufacture,
composition of matter, or any useful improvement thereof, shall be entitled to a
patent therefor, subject only to the conditions and requirements set forth in this
title.
§101(b) Sole Exceptions to Subject Matter Eligibility
• A claimed invention is ineligible under subsection (a) only if the claimed invention
as a whole exists in nature independent of and prior to any human activity, or can
be performed solely in the human mind.
§101(c) Sole Eligibility Standard
• The eligibility of a claimed invention under subsections (a) and (b) shall be
determined without regard to the requirements or conditions of sections 102, 103,
and 112 of this title, the manner in which the claimed invention was made or
discovered, or whether the claimed invention includes an inventive concept.
53

54. USPTO Guidance

• Numerous Memorandum
–
–
–
–
–
–
–
April 19, 2018 (Berkheimer)
April 2, 2018 (Finjan, Core Wireless)
November 2, 2016 (McRO, Bascom)
July 14, 2016 (Rapid Litigation, Sequenom)
May 19, 2016 (Enfish, TLI)
December 16, 2014
June 25, 2014 (Alice)
• Initially unclear due to insufficient guidance from Mayo and
Alice
• Inconsistently application throughout USPTO
• Courts not bound by USPTO Guidance
• USPTO employs different claim construction standard
54

55. District Courts

• Rule 12(b)(6) (failure to state complaint) and Rule 12(c)
(judgement on pleadings) Motions
–
–
–
–
–
Remain popular
Claim construction may not be required
Texas (TX) denies most
Delaware (DE) does not grant
Virginia (ED VA) grants many motions
• Venue dependent
• More cases being filed in Delaware than Texas (TC Heartland)
55

56.

5. Conclusions

57. Conclusions

• Subject-matter eligibility is unsettled
• No clear rule for determining whether a claim satisfies 35
U.S.C. § 101
– "However, a search for a single test or definition in the decided cases
concerning § 101 from this court, and indeed from the Supreme Court,
reveals that at present there is no such single, succinct, usable
definition or test."
• Amdocs (Israel) Limited, v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir.
2016)
• No potential solution to uncertainty
– Federal Circuit, District Courts, Supreme Court, Congress
– USPTO most willing to address 35 U.S.C. § 101
• Current landscape does not favor patentees
– Uncertainty and unpredictability
57

58. Questions?

59. Thank you! (고맙습니다)