In January, the USPTO announced it would seek comments on the new Guidance it had published on patent subject matter eligibility. We have previously discussed this Guidance and won’t repeat ourselves here. Instead, this post will highlight the wide range of views expressed by the thousands of comments that the USPTO received. Although the comment
The Supreme Court’s recent decision on patent venue, TC Heartland LLC v. Kraft Foods Group Brands, may actually turn out to be a good thing for patentees when it comes to Section 101. But before we get to that, let’s do the AliceStorm numbers: The overall Alicestorm index of percentage of Section 101 ineligibility outcomes in the federal courts is up 0.6% from March, at 67.6%. The Federal Circuit contributed the most to the increase, issuing eight separate decisions finding patent eligible subject matter, with six of these decisions being Rule 36 affirmances. The number of motions on the pleadings index are up as well, by 1.2% from March, at 63.3%. Turning to the monthly numbers, after the record number (35) of Section 101 decisions in March 2017 things returned to “normal” with just 15 decisions: The bump in March contributed to a marked increase in the three-month average of ineligible decisions, jacking it up from 62% to 73%. But beneath that, we can also see that the raw number of ineligible decisions in April (13) is about the same as the high marks since August 2016, and that the raw number of eligible outcomes (2) is at its lowest level since October 2015. This puts the ratio of ineligible to eligible decisions in April 2017 at 6.5, the highest it’s been since June 2015. Whether this signals a real uptick in favor of patent defendants or just a temporary blip in the overall downward trend in ineligible outcomes remains to be seen. …
The most significant Federal Circuit decision in March was Thales Visionix, Inc. v. United States, another case finding eligible subject matter. What distinguishes this case—and demonstrates the inherently subjective I-know-it-when-I-see-it nature of the Alice test—is the extraordinary breadth of the claims. Consider claim 22, a single-step method claim:
A method comprising determining an orientation of an object relative to a moving reference frame based on signals from two inertial sensors mounted respectively on the object and on the moving reference frame.
The court held that this claim was patent eligible, because it was not directed to an abstract idea in Step 1 of the Alice test:
As many of you know, the Federal Circuit’s decision in Trading Technologies was the first time a graphical user interface had been found patent eligible by the Federal Circuit. The defendant CQG moved for both panel rehearing and enbanc rehearing.
My client SHzoom filed a request to make the Trading Technologies decision precedential. CQG attempted…
The Federal Circuit’s recent decision in McRO has been interpreted by many in the patent community as a further signal that the so-called “pendulum” is swinging back to a more favorable position for patentees. There is some superficial evidence of this possibility. Let’s look at the numbers. September 2016 was the first time since Alice that the number of federal court decisions finding eligible subject matter (16) exceeded those finding ineligible subject matter (13). Those sixteen decisions also mark the highest number of eligibility decisions in a single month. The most significant contribution to the switchover is that only two motions to dismiss under § 101 were granted in September, compared to nine that were denied, the largest gap since March 2016 (6 granted, 10 denied). …
The press is all abuzz with reactions to Judge Mayer’s concurring opinion bluntly stating that “claims directed to software implemented on a generic computer are categorically not eligible for patent.” Intellectual Ventures I LLC v. Symantec Corp. et al., 2015-1769, -1770, -1771 (Fed. Cir. Sept. 30, 2016).
Here, I’ll just explore one aspect of this remarkable opinion—the reasons that judicially created exceptions are dangerous. As we have previously detailed on this blog, the precipitous drop-off in PTO allowances and Article III court confirmations of validity are not driven by the literal text of Section 101 or other portions of the patent statute, but instead by judicial interpretations of exceptions that the courts deem must be read into the Patent Act. Many commentators have observed that such judicially created exceptions may be an extremely convenient way to sidestep “bad” patents but are not needed, given that the provisions of sections 102, 103 and 112 would be just as effective in addressing vague or overbroad patent claims. Single-paragraph district court explanations of why particular patents claim nothing more than an abstract idea now regularly invalidate patents at the pleadings stage. Judge Mayer’s concurrence adds fuel to this fire. A few examples from his concurrence are illustrative.
Given the volume of district court decisions regarding Section 101, I typically don’t find ones that stand out enough to warrant discussion. But last week’s decision by Judge Stark in MAZ Encryption Technologies LLC v. Blackberry Corporation is an exception. The opinion demonstrates a rigorous application of the requirements of a Rule 12(c) motion for judgment on the pleadings, as well as an integrated approach to the Mayo test. The opinion is noteworthy as well because Judge Stark is no pushover on Section 101: Before MAZ he granted six of nine Section 101 motions (including two 12(b) motions) invalidating over a dozen patents. Judge Stark also wrote the opinion invalidating the patents in the Federal Circuit’s Mortgage Grader case. …
My previous blog on McRo focused on the direct aspects of the decision, but there are other excellent points that the court makes and that can be derived from the opinion, and that should play an important role in how the courts and the USPTO handle the Mayo test. First, the mathematical nature of the invention was not fatal; it was vital. One of the favorite buzz-saw arguments for finding ineligibility is that claims for computer-implemented inventions recite—either directly or indirectly—mathematical operations. This is about as insightful as stating that patent claims in U.S. patents are written in the English language. The invocation of the dreaded mathematical algorithm Jabberwocky and talismans of Benson and Flook often convince jurists that the claims are abstract. The McRo court did not run scared here. Quite the contrary, the McRo court relied on the underlying mathematical nature of the rules to demonstrate non-preemption: “Defendants concede an animator’s process was driven by subjective determinations rather than specific, limited mathematical rules. . . . It is the incorporation of the claimed [mathematical] rules, not the use of the computer, that “improved [the] existing technological process” by allowing the automation of further tasks.” This holding should be heeded by the courts and the USPTO to not treat all mathematically implemented inventions as necessarily abstract. …
Over the past two months, the trends I’ve discussed in my previous blogs on AliceStorm have continued and become more entrenched. In particular, the Federal Circuit has been quite active, issuing nine decisions since late June. These decisions lay out a theory of patent eligibility that in my view is divorced from both scientific reality and how innovation actually occurs. I’ll discuss those points below, but first let’s do the numbers. June, July and August showed an uptick in the number Section 101 decisions from April and May, the majority of these being motions to dismiss and judgments on the pleadings. The rates of invalidity holdings continue to be steady: 70% overall, and 66.3% in the district courts. Success on motions on the pleadings is up to 68.1%. …
Two years ago this Sunday, the Supreme Court in Alice Corp. Pty Ltd. v. CLS Bank Int'l1 addressed a relatively narrow issue: does a claim reciting a generic computer implementation transform an abstract idea into a patent-eligible invention? The Court considered this a "minor case" in which it did not break new ground, but instead simply followed its decisions in Bilski2 and Mayo.3 The Court reiterated a two-step test set forth in Mayo determine whether the claim recites a judicial exception and if so, determine whether the claim recites an "inventive concept," something "significantly more" than the exception and "enough" to transform the claim into eligible subject matter.4 The Court applied this test to find that Alice’s claim simply recited a fundamental economic practice of risk intermediation through third party settlement, and then held that the presence of generic computing elements or steps was not sufficient to provide an inventive concept.5 To the Court, this was an easy case.
Three aspects of the decision are worth noting. First, the Court did not see the case as presenting a difficult question of defining what is an abstract idea. "In any event, we need not labor to delimit the precise contours of the "abstract ideas" category in this case….Both [Alice and Bilski’s claims] are squarely within the realm of "abstract ideas" as we have used that term.6 In other words, whatever an abstract idea was before Alice, it was the same afterward: there was no expansion of the scope of the term.