Source: https://www.complexip.com/fractured-patent-appeals-court-casts-shadow-over-computer-software-patents/
Timestamp: 2019-04-26 06:41:21+00:00

Document:
Because the opinions from the highly divided Court span 135 pages, only the per curium opinion is reported herein. The Court’s opinion is extensively quoted since condensation may further confuse our readers.
“The statute sets forth four broadly stated categories of patent-eligible subject matter: processes, machines, manufactures, and compositions of matter. As the Supreme Court has explained, Congress intended that the statutory categories would be broad and inclusive to best serve the patent system’s constitutional objective of encouraging innovation.” (citing Diamond v. Diehr, 450 U.S. 175, 191 (1981) and Diamond v. Chakrabarty, 447 U.S. 303, 308-09 (1980)).
“While the categories of patent-eligible subject matter recited in § 101 are broad, their scope is limited by three important judicially created exceptions. ‘[L]aws of nature, natural phenomena, and abstract ideas’ are excluded from patent eligibility, Diehr, 450 U.S. at 185, because such fundamental discoveries represent ‘the basic tools of scientific and technological work.’” (citing Gottschalk v. Benson, 409 U.S. 63, 67 (1972)).
Once the abstract idea is identified, the Supreme court has “measured the scope of the claims [in the Benson case] against the scope of that overarching abstract idea. In practice, the claims [in for converting binary coded decimal (BCD) numerals into pure binary numerals] were ‘so abstract and sweeping as to cover both known and unknown uses of the BCD to pure binary conversion’ and would thus reach every application of the basic conversion algorithm, in contrast to earlier cases concerning patent-eligible process claims that had been cabined to discrete applications ‘sufficiently definite to confine the patent monopoly within rather definite bounds.’” (citing Gottschalk v. Benson, 409 U.S. at 68 – 69).
In Benson, the Supreme Court said: ”The mathematical formula involved here has no substantial practical application except in connection with a digital computer, which means that if the judgment below is affirmed, the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.” Id. at 71 – 72. However in that Benson case, the predecessor of the Federal Circuit, the CCPA, had approved those patent claims and “had interpreted both claims as requiring a computer and had upheld them on that basis.” See In re Benson, 441 F.2d 682, 687-88 (CCPA 1971).
“First and foremost is an abiding concern that patents should not be allowed to preempt the fundamental tools of discovery-those must remain ‘free to all … and reserved exclusively to none.’ Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948).” Preemption features prominently in the Supreme Court’s decisions of Mayo, 132 S. Ct. at 1301; Bilski, 130 S. Ct. at 3231; Diehr, 450 U.S. at 187; Benson, 409 U.S. at 72, O’Reilly v. Morse, 56 U.S. 62, 113 (1853) (rejecting a claim that would have broadly conferred “a monopoly” in the use of electromagnetism, ”however developed, for the purpose of printing at a distance”).
“To be clear, the proper focus is not preemption per se, for some measure of preemption is intrinsic in the statutory right granted with every patent to exclude competitors, for a limited time, from practicing the claimed invention. See 35 U.S.C. § 154. Rather, the animating concern is that claims should not be coextensive with a natural law, natural phenomenon, or abstract idea; a patent-eligible claim must include one or more substantive limitations that, in the words of the Supreme Court, add ‘significantly more’ to the basic principle, with the result that the claim covers significantly less. See Mayo 132 S. Ct. at 1294. Thus, broad claims do not necessarily raise § 101 preemption concerns, and seemingly narrower claims are not necessarily exempt. What matters is whether a claim threatens to subsume the full scope of a fundamental concept, and when those concerns arise, we must look for meaningful limitations that prevent the claim as a whole from covering the concept’s every practical application.” (Citing Mayo at 1302).
“In short, one cannot meaningfully evaluate whether a claim preempts an abstract idea until the idea supposedly at risk of preemption has been unambiguously identified. Although not required, conducting a claim construction analysis before addressing § 101 may be especially helpful in this regard by facilitating a full understanding of what each claim entails.” (Citing Bancorp Servs., LLC v. Sun Life Assurance Co. of Can., 687 F.3d 1266, 1273 – 74 (Fed. Cir. 2012)).
To recap, claim limitations which do not support Section 101 patent eligible subject matter are: (1) well-understood steps, routine or conventional steps which are used by researchers in the field; (2) token or trivial limitations; (3) insignificant post-solution activity; (4) vague limitations cast in highly general language; (5) “extravagant language to recite a basic function” (see “Alice Patents” section below); (6) generic computer functionality that lends speed or efficiency to the performance; and (7) bare field-of-use limitations. These claim limitations effectively preempt all uses of a fundamental concept within the stated field.
The patent owner Alice Corp. argued that the following claim limitations for “shadow accounts” made the computer method claims, the computer readable medium claims (so-called ‘Beauregard claims,’ named for In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995)) and the apparatus or computer system claims eligible patent subject matter.
Claim 33. A method of exchanging obligations as between parties including: (1) creating a shadow credit record and a shadow debit record for each stakeholder party and (2) at the end-of-day, the supervisory institution instructing ones 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.
A truncated version of Claim 1 of the Alice ‘720 patent stated: “1. A data processing system to enable the exchange of an obligation between parties … a data storage unit having stored therein information about a shadow credit record and shadow debit record … a computer, coupled to said data storage unit, that is configured to (a) receive a transaction; (b) electronically adjust; (c) generate an instruction.” The claim then closely followed the method steps.
Commentary: In conclusion, patent practitioners and the courts continue to “seek [a] framework that will provide guidance and predictability for patent applicants and examiners, litigants, and the courts.” CLS Bank v Alice Corp., Slip opn. P. 9. Given the Court’s fractured positions, although this opinion gives practitioners additional guidelines, the Court’s stated goal of predictability has not been achieved. The leap from “a form of escrow” (an abstract idea) to “shadow accounts” and end-of-day instructions for credits or debits which are “irrevocable, time invariant obligations placed on the exchange institutions” seems tenuous and not particularly predictable. Also, critical comments regarding claim drafting strategies and the use of highly stylized claim language ignores a patent practitioner’s obligation to draft patent claims as broad as possible to capture his or her client’s constitutional rights to reap the fruits of their invention.

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