Source: http://www.patentdocs.org/patentable-subject-matter/page/2/
Timestamp: 2017-09-26 12:45:31
Document Index: 336632092

Matched Legal Cases: ['§ 101', '§ 101', '§ 101', '§ 103', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 328', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101', '§ 101']

Proceedings for infringement of U.S. Patent No. 8,005,303 (Recognicorp, assigned from IQ Biometrix) resulted in an appeal decided on 28 April 2017, which decision was reviewed in this space by Michael Borella, and also criticised (see "Regnoicorp -- A Miscarriage of Justice Calling for En Banc Reconsideration").
As expected, a petition for en banc rehearing was filed on 30 May, and was followed on 11 June by an Independent Inventors' amicus brief, and on 13 June by a further amicus brief by the author.
Recognicorp explained that encoding and decoding data using computers is an important and innovative field of technology and objected that the panel opinion threatened the validity of all encoding and decoding patents, including patents covering important technologies such as MP3 audio coding, MPEG video coding, JPEG image coding and encryption. It cited decisions where such claims have been upheld including DDR Holdings, LLC v. Hotels.com; Cal. Inst. of Tech. v. Hughes Communs., Inc.; and TQP Dev and LLC v. Intuit Inc.
Their brief identified at least two inventive concepts recited in the claims of the '303 patent:
(1) using a single composite facial image code composed of a number of facial feature element codes, such as for lips or eyes, to represent the entire facial image instead of encoding the image pixel-by-pixel as was done in the prior art; and
(2) using a particular algorithm to combine the various facial feature element codes together into a single composite facial image code by multiplying the facial code by a code factor for each facial feature.
They argued that these qualified as improvements in technology or in a technical field. There was no basis for holding that the fields of image encoding and data compression were not "technical field[s]" in which patentable improvements could be made, nor could reducing bandwidth and memory storage requirements be disregarded but instead enjoyed status as specific improvements in the functioning of a computer. The improvements achieved here should be contrasted with Digitech where no improvement was asserted.
Although the panel opinion objected that, like Digitech, "a user starts with data, codes that data using 'at least one multiplication operation,' and ends with a new form of data" Recognicorp replied that this was plainly not what the claims of the '303 patent recited. They did not recite "start[ing] with data," or even "gathering . . . data [without] . . . input from a physical device," but rather began with "displaying facial feature images" which are "select[ed]" "via a user interface." Similarly, the claims did not "end with a new form of data," but rather they ended with the display, on a second display, of the reproduction of a facial image based on the composite facial image code. There was no basis for finding the claims ineligible under Alice step one merely because of the involvement of a mathematical method, compare MCro v Bandai, and also Enfish, which started with a mathematical table of rows and columns, performed mathematical operations and ended with a self-referential table for a computer database.
In relation to the second step of Alice, it was argued that the panel wrongly rejected the potential that mathematical equations and algorithms, even when implemented on a computer to produce tangible benefits in that computer's operation, could constitute patentable inventive concepts. The panel opinion failed to perform any such analysis -- it did not attempt to analyze whether the "facial feature element codes," "code factors," and the "particular encoding process using the specific algorithm disclosed" that used those codes to create a "composite facial image code" was "significantly more" than "the abstract idea of encoding and decoding image data". Recognicorp argued that improvements in computer and software technology often take the form of new and innovative mathematical operations and algorithms, which when appropriately claimed as being performed on a computer as part of a technological process, should be eligible for patent protection.
The Individual Inventors' brief also took the position that the panel opinion had ignored the rule in Alice that eligibility under § 101 requires an analysis of all claim limitations as an ordered combination. That rule had been clarified in McRO to require that all claim limitations be addressed in step 1 of the Alice test but had been discarded by the decision. The wisdom "that courts 'must be careful to avoid oversimplifying the claims' by looking at them generally and failing to account for the specific requirements of the claims" stated in McRO had been ignored. The consequence was that under the instant decision, patent examiners not only now have carte blanche to ignore any claim limitation and issue of evidence under step 1 of Alice, but are free to ignore decades of established precedential decisions focused on preemption in favor a per se rule having no basis in preemption.
The Cole brief followed many of the arguments of Recognicorp and the Individual Inventors and asked:
• What scope is attributable to the phrase "directed to" in the first stage of the Alice test, at what level of abstraction is interpretation of a representative claim impermissibly untethered from the express language of that claim, and is an abstraction permissible where it omits reference to elements positively recited in a representative claim?
• Is a new and beneficial result improving a technological process available to rebut an objection that claimed subject matter falls within the law of nature, natural phenomenon or abstract idea exception?
• Is the Alice test, as applied in the breadth of the present decision, incompatible with the obligations of the United States under Article 27 of TRIPS?
In relation to the first question, the brief argued that the words "directed to" lack clear definition, which may account for the risk of inappropriate paraphrasing of specific and detailed claim language leading to unacceptable flexibility. Arbitrary disregard of claimed elements when conducting the § 101 analysis creates uncertainty for patent applicants based both in the U.S. and in Europe, for those involved in re-examination and contentious proceedings before the USPTO and for those involved in litigation. The solution is to reaffirm the rule accepted as black letter law that all elements or limitations recited in a claim must be taken into account when considering anticipation or infringement, and hence by implication § 101 eligibility (citing the case law listed in MPEP 2131 Anticipation), and that the arrangement of those elements specified in the claim must also be considered.
Evidence of invention pertinent to § 103 should be equally applicable to § 101, and there was no evidence that the prior art paper strips nor the coding systems of Samuel Morse or Paul Revere can be said to beneficially improve the transmission of images.
Finally, it argued that the present decision is in conflict with established legal principles under the EPC as exemplified in the landmark decision T 208/84 Computer-related invention/VICOM. In that decision, the EPO held that a claim to digitally filtering a data array was an ineligible mathematical method, but it became eligible when explicitly applied to digitally processing images. In contrast, the panel opinion here rejects operations performed on coded data as ineligible, but refuses to acknowledge that such operations should become eligible when applied to the production of images.
It is to be hoped that the petition will be granted and that the present case will provide a landmark decision leading to a fairer and less arbitrary approach to eligibility both for computer-related inventions and for those such as Sequenom in life sciences.
Posted at 11:59 PM in Federal Circuit, Patentable Subject Matter | Permalink | Comments (3)
Posted at 11:13 PM in Conferences & CLE's, Patentable Subject Matter | Permalink | Comments (0)
Credit Acceptance Corp. v. Westlake Services (Fed. Cir. 2017)
Claims Directed to Providing Financing for Allowing a Customer to Purchase a Car found Invalid under 35 U.S.C. § 101
In a precedential opinion, the Federal Circuit affirmed a final written decision of the Patent Trial and Appeal Board ("Board") in a Covered Business Method ("CBM") review proceeding in which claims were held to be directed to patent-ineligible subject matter under 35 U.S.C. § 101.
Credit Acceptance Corp. ("CAC") is the assignee of U.S. Patent No. 6,950,807, which includes both system and method claims directed to providing financing for allowing a customer to purchase a product selected from an inventory of products maintained by a dealer. In one embodiment, the products are vehicles for sale at a car dealership. The invention involves maintaining a database of the dealer's inventory, gathering financing information from the customer, and presenting a financing package to the dealer for each individual product in the dealer's inventory.
Certain claims, such as the claims at issue here, involve the application of these steps using elements such as a "database," a "user terminal," and a "server." For example, representative claim 25 provides:
a server having access to the data in the database adapted to communicate with the user terminal over a network, whereby the financial information about the customer may be transmitted to the server, the server generating a financing package for each product in the dealer's inventory and transmit financing terms for each financing package to the user terminal via the network for presentation to the user for immediate purchase, wherein the server is further configured such that the financing terms of each financing package include an advance amount to be paid to the dealer by said financing party if the customer purchases the product associated with the financing package.
The Board determined that claims 10–12 and 14–33 of the '807 patent were directed to patent-ineligible subject matter under 35 U.S.C. § 101. CAC appealed that decision.
To determine whether the claims were patent-eligible, the Federal Circuit followed the two-step Alice/Mayo analysis. First, a determination is made of whether the claims at issue are directed to an abstract idea. If so, in a second step is performed for a search for an inventive concept -- i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.
The Board determined that the claims were directed to the abstract idea of "processing an application for financing a purchase." The Federal Circuit agreed. The Federal Circuit did not see any meaningful distinction between this type of financial industry practice and "the concept of intermediated settlement" held to be abstract in Alice, or the "basic concept of hedging" held to be abstract in Bilski v. Kappos.
CAC suggested that the claims are not abstract because they "improve[] the functionality of the general purpose computer by programming fundamentally new features." But the Federal Circuit found that this is so only in the sense that the claims permit automation of previously manual processing of loan applications.
The background portion of the '807 patent specification explains that under present methods for selling cars and trucks, the financing process begins with the salesperson completing a credit application, and this involves receiving detailed financial information from the customer. The specification continues to describe a known process that occurs when the first application is rejected: resubmitting applications to different lending institutions, submitting applications for other vehicles in the dealer's inventory, and submitting applications with changed financing terms.
Prior cases have made clear that mere automation of manual processes using generic computers does not constitute a patentable improvement in computer technology. Using computers as tools to perform an abstract idea is not going to satisfy section 101.
Here, the invention's communication between previously unconnected systems -- the dealer's inventory database, a user credit information input terminal, and creditor underwriting servers, was not considered to be an improvement in computer technology. Rather, the focus of the claims is on the method of financing, and the recited generic computer elements are invoked merely as a tool.
CAC also asserted that claim 25 is not directed to an abstract financial process, but rather to configuring a computer system to combine data from multiple electronic data sources to synthesize a comprehensive report of structures for a dealer and a creditor to co-finance a purchase. But the Federal Circuit commented that collecting information, including when limited to particular content (which does not change its character as information), is within the realm of abstract ideas, and the output of data analysis can also be abstract.
At step two of the Alice framework, the Board concluded that the claims did not recite an inventive concept. Again, the Federal Circuit agreed.
The Federal Circuit noted that the use and arrangement of conventional and generic computer components recited in the claims -- such as a database, user terminal, and server -- does not transform the claim, as a whole, into "significantly more" than a claim to the abstract idea itself.
CAC asserted that prior to the '807 patent, because computers were unable to perform the claimed process, automobile financing was manual, iterative, and laborious. CAC suggested that the invention solves this problem because it provides software that allows computers to supplant and enhance the existing series of manual steps of securing financing -- a task they were previously not configured to perform.
But the Federal Circuit found that merely configuring generic computers in order to supplant and enhance an otherwise abstract manual process is precisely the sort of invention that the Alice Court deemed ineligible for patenting. Relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible.
Significantly, the Federal Circuit noted that the claims do not provide details as to any non-conventional software for enhancing the financing process. Also, the Federal Circuit found that CAC did not clearly identify any particular inventive concept in the ordered combination that it alleges the Board overlooked.
Thus, the Federal Circuit concluded that the challenged claims of the '807 patent are not directed to patent-eligible subject matter under 35 U.S.C. § 101.
This case also included arguments of estoppel, by CAC, alleging that Westlake (the petitioner) should have been barred from challenging certain claims of the '807 patent in the CBM in light of a prior CBM proceeding which was instituted on different claims of the '807 patent.
However, the Federal Circuit noted that a CBM review proceeds in stages: first, the Board decides whether to institute a review, and second, if review is instituted, the proceeding enters a trial stage and the Board later issues a "final written decision" under 35 U.S.C. § 328(a). Once the Board issues a final written decision, the estoppel statute applies.
The Federal Circuit found that a final written decision on instituted claims is not a final determination on the patentability of non-instituted claims. Because a final written decision does not determine the patentability of non-instituted claims, it follows that estoppel does not apply to those non-instituted claims in future proceedings before the PTO.
Panel: Circuit Judges Dyk, Mayer, and Reyna
Opinion for the court by Circuit Judge Dyk; opinion dissenting-in-part by Circuit Judge Mayer (the dissent concerns a jurisdictional issue that was raised in the appeal, and which is not addressed here)
Posted at 11:30 PM in Federal Circuit, Patentable Subject Matter | Permalink | Comments (1)
The textbook policy rationale for the existence of a patent system is a quid-pro-quo -- a tradeoff in which an inventor is granted a time-limited property right over his or her invention in return for disclosing it to the public. Such disclosure is expected to, over time, spur further innovation, and bolster research and development. But empirical measurements of the impact of the patent system on innovation and the economy have been difficult to come by. Patents are just one factor influencing ongoing scientific and engineering advances, and their impact is perhaps impossible to determine in an aggregate sense.
Heidi L. Williams of the National Bureau of Economic Research reviewed the available evidence of how patents on existing technologies might affect follow-on innovation and research investment. Her conclusion is that more evidence is needed: "[G]iven the limitations of the existing literature we still have essentially no credible empirical evidence on the seemingly simple question of whether stronger patent rights -- either longer patent terms or broader patent rights -- encourage research investments into developing new technologies."
Nonetheless, in a recent article, Vera Ranieri of the Electronic Frontier Foundation (EFF) has used this essentially neutral position to argue in favor of recent changes to U.S. patent law that arbitrarily and subjectively limit patentable subject matter. In doing so, Ms. Ranieri falls back on a number tired tropes and misconceptions about the workings of U.S. patent law, and fails to consider the damage done by these changes to the certainty function of the patent system.
In 2014, the Supreme Court handed down a highly controversial decision in Alice Corp. v. CLS Bank Int'l. In a nutshell, the Court ruled that patent claims should be analyzed to determine whether they are too "abstract," and if they are, these claims should be further analyzed to determine whether they incorporate "significantly more" than an abstraction. In doing so, the Court went well beyond the plain language that Congress set forth in 35 U.S.C. § 101, the section of the patent statute that defines subject-matter eligibility. Furthermore, the Court purposely declined to define what it meant by "abstract" and "significantly more," essentially leaving it up to the Federal Circuit, the district courts, and the USPTO to provide meaning for these ambiguous terms.
While not explicitly stating it, in Alice the Court effectively targeted software and business method inventions (and certain types of life science inventions, such as diagnostic methods) for an additional level of scrutiny. In fact, the EFF's own amicus brief in Alice encouraged the Court to use the case to "reign in overbroad software patents." Whether or not this argument ultimately swayed the Justices to rule as they did, the effect of Alice is clear -- over 15,000 patent claims have been invalidated under § 101 since this decision came down, the vast majority of these in the software and business method space. Additionally, some software and most business method claims are now harder to obtain from the USPTO, with rejection rates of over 90% in some business method art units.
In many cases, courts have invalidated patents under § 101 without undertaking claim construction. Let that sink in for a while -- courts are throwing out patents as allegedly being abstract without determining the actual scope of the claimed invention.
The Alice Decision Has Not Been, and Cannot Be, Applied Consistently or Objectively
The problem with Alice is not just that it limits the scope of patentable subject matter, but that it does so in an arbitrary and subjective fashion. Courts and the USPTO have struggled mightily with making sense of the decision. Judge Wu of the United States District Court for the Central District of California criticized Alice for setting forth an "I know it when I see it" test.[1] Judge Pfaelzer, a colleague of Judge Wu, wrote that the Supreme Court's patent-eligibility cases "often confuse more than they clarify [and] appear to contradict each other on important issues."[2] Former Chief Judge of the Federal Circuit Paul Michel stated that Alice "create[d] a standard that is too vague, too subjective, too unpredictable and impossible to administer in a coherent consistent way in the patent office or in the district courts or even in the federal circuit."
While the Federal Circuit has attempted to provide a consistent line of post-Alice case law, this has resulted in some very thin bacon slicing. For instance, in 2014 a panel in Ultramercial v. Hulu found a complex and narrow web-based transaction to be unpatentably abstract, while another panel in DDR v. Hotels.com found a web server that combines the look and feel of two different web sites meeting the requirements of § 101. Last year, in Synopsys v. Mentor Graphics, an invention automating circuit design procedures was found to be abstract because these procedures had been performed manually by humans. But in McRO v. Bandai Namco Games America, an invention automating lip-synchronization in animated characters was found not abstract even though the automated procedure could be performed by humans.
While one could argue that there are at least tenuous distinctions between the claimed inventions that were found eligible and ineligible in these four cases, the recent Recognicorp v. Nintendo case clearly illustrates the Federal Circuit's inability to apply Alice consistently. In the decision, the panel characterized a 154-word claim as nothing more than "encoding and decoding image data," despite the panels in Enfish v. Microsoft and McRo explicitly forbidding such claim over-simplification.
At the USPTO, despite the administrators' admirable efforts to provide clear examination guidelines with respect to Alice, it is notoriously well known amongst practitioners that different art units and different examiners will apply the Alice test in radically different ways. Further, it is common for an applicant to receive an Alice rejection that is purely conclusory in nature -- the examiner essentially saying "Your claims are abstract, no patent for you!" without any rationale or reasoning to support the rejection. While the latter type of rejection can be rebutted, it imposes additional and unnecessary costs on the applicant to go through extra cycles of Office actions or appeals.
Ultimately, the problem does not lie with the Federal Circuit or the USPTO. The Alice test is inherently subjective, requiring one to look at a claim and imagine analogous "well-known, routine, and conventional" activities. In doing so, examiners and judges often ignore key claim elements, resulting in a 10,000-foot view of the claim being analyzed, rather than the actual claimed invention.
Due to this subjectivity, reasonable minds can differ regarding whether a claim is abstract and whether it contains something more. There is no way for thousands of examiners and hundreds of federal judges to reach the same conclusion on a consistent basis.
The Lack of Evidence Found in the Williams Paper Cuts Both Ways
For sake of argument, let's assume that Ms. Williams's analysis is correct, and that there is little or no evidence identified yet that establishes innovation is spurred on by a strong patent system.[3] Ms. Ranieri interprets this result as an invitation to slam the door on software patents, arguing that there is no need to change the law to fix problems introduced by Alice.
But the same argument could be used to establish that there was no need for the Supreme Court to change the law in Alice either. If the impact of patent system strength on innovation was unclear, the Court should not have instituted such a dramatic change. Besides, Congress is better equipped than the Court to derive policy from such studies. If anything, the dramatic growth of technology company profitability and market capitalization from the mid-1990s to the Alice decision in 2014 suggests that a strong patent system is not inconsistent with innovation and technological investment in the software market.
Ms. Ranieri also states that the Williams paper establishes that there is no evidence that the Alice decision has "done any harm to the innovation economy or innovation generally." But the paper does not address Alice at all, and most of its cited research was conducted prior to the 2014 date of Alice. Given the lengthy, multi-year time scales of patent lawsuits, patent prosecution, and research and development, the three years between then and now is way too short a time period to draw such broad conclusions.
Ms. Ranieri Mischaracterizes the Efforts to Overturn Alice
Throughout her article, Ms. Ranieri makes misleading statements about efforts to overturn Alice. Particularly, she focuses on proposals by the Intellectual Property Owners Association and the American Intellectual Property Law Association to rewrite § 101. A comparison of their efforts indicates that they would replace the Alice test with an analysis of whether the claimed invention as a whole (i) exists in nature independently of human activity, or (ii) solely in the human mind. Such a test would certainly result in fewer patents being invalidated under § 101, but would also go a long way toward clarifying the law.
Unlike Ms. Ranieri's contentions, this would not "return us to a world where 'do it on a computer' ideas are eligible for a patent." That world never existed. If a claimed invention's sole difference from prior art is to perform a known series of steps on a computer, the invention is probably obvious and can be invalidated on those grounds. In fact, the claims in Alice and many other so-called "overly broad" patents could be invalidated under the patent statute's existing novelty, non-obviousness, and written description provisions. Ms. Ranieri's further statement that the proposed changes to § 101 would mean that "anything is patentable" aside from the aforementioned exceptions ignores the fact that eligible subject matter is just one requirement of many for a patent to be granted.
Furthermore, Ms. Ranieri asserts that "the recent reform proposals seem like little more than a bid by lawyers to create work for themselves." If anything, the opposite will likely be the case. The uncertainty surrounding Alice has been a boon for § 101 focused practice, opening more patent prosecution and litigation opportunities. While some applicants are filing fewer patents as a result of Alice, many are filing more -- attempting to protect multiple narrow inventions rather than one or two broader ones. There are more appeals in the USPTO, as well as more covered business method review proceedings as well.
When there is a gray area in the law, lawyers are needed more than ever to help their clients navigate the ambiguities. If the Intellectual Property Owners Association and the American Intellectual Property Law Association succeed in their efforts, the patent law will be less ambiguous and there will be far fewer billable hours spent determining whether or not a claim is abstract. Even though such a change might have a negative impact on their bottom lines, many patent attorneys would welcome the change because the patent system is broken as long as Alice stands.
Opposition to the Alice test is not based on it making patents easier to invalidate, but that it does so in an unworkable and intellectually dishonest fashion. This has resulted in applicants with limited financial resources being unable to pursue patent protection for legitimate technical inventions. If such a trend is widespread and continuing, small U.S. companies will be reluctant to innovate in certain market segments because of the risk of their U.S.-based or foreign competitors getting a free ride to copying or cloning a product or service.
This is the area that merits academic study -- has Alice actually harmed innovation? As noted above, it may be a while before we can make that determination. But if it is the case, that would be just one more reason of many for discarding the test.
[1] Eclipse IP v. McKinley Equipment (C.D. Cal. 2014).
[2] Cal. Inst. of Tech. v. Hughes Commc’ns Inc. (C.D. Cal. 2014).
[3] As far as we know, the paper has not yet been subject to thorough peer review, and therefore its conclusions should be viewed as preliminary at best.
Posted at 10:30 PM in Media Commentary, Patentable Subject Matter | Permalink | Comments (10)
Message Publishing Patents Found Invalid under 35 U.S.C. § 101
In a recent decision by the U.S. Court of Appeals for the Federal Circuit, the Court held all asserted claims of five U.S. patents to be invalid under 35 U.S.C. § 101 because the claims recite patent-ineligible subject matter.
EasyWeb sued Twitter for infringement of the following five patents directed to a message publishing system: U.S. Patent Nos. 7,032,030; 7,596,606; 7,685,247; 7,689,658; and 7,698,372. The patents are generally directed to allowing any person or organization to easily publish a message on the Internet. According to the specification of the '247 patent, at the time of the invention (priority filing date of March 11, 1999), publishing a message on the Internet was a daunting task because of cost, limitations in existing software, and a lack of technical knowledge. The patents sought to address this problem by inventing a message publishing system that accepts messages in multiple ways, such as by fax, telephone, or email, verifies the message was sent by an authorized sender, and converts and publishes the message on the Internet.
Namely, the message is received and converted from a first format (e.g., fax) to a second format, with the second format preferably being one or more webpages. The message is stored within an Internet web server, and is retrieved from the storage area when a request for the message has been received from a requester. The message is then transmitted to the requester over the Internet.
The parties agreed that claim 1 of the '247 patent is representative:
EasyWeb sued Twitter for patent infringement in the U.S. District Court for the Eastern District of New York. At the District Court, Twitter moved for summary judgment of non-infringement and ineligibility under 35 U.S.C. § 101. The District Court granted the motion, finding that the patents are directed towards ineligible subject matter, or in the alternative that Twitter did not infringe any of the patents.
On appeal, the Federal Circuit followed the Supreme Court's two-step framework for determining patent-eligibility under § 101. First, a determination is made as to whether the claims at issue are directed to a patent-ineligible concept. Second, if the claims are directed to patent-ineligible subject matter, the court considers the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.
Beginning with the first step, the Federal Circuit concluded that claim 1 is directed to an abstract idea. The Federal Circuit summarily noted that claim 1 merely recites "familiar concepts of receiving, authenticating, and publishing data", and as explained in a number of prior cases, claims involving data collection, analysis, and publication are directed to an abstract idea. The Federal Circuit referred to Elec. Power Grp. v. Alstom S.A. (Fed. Cir. 2016), which held that "collecting information, analyzing it, and displaying certain results of the collection and analysis" are "a familiar class of claims 'directed to' a patent-ineligible concept."
In addition, because Claim 1 simply recites use of generic computer technology to perform data collection, analysis, and publication rather than reciting an improvement to a particular computer technology, the Federal Circuit easily found claim 1 to be directed to the abstract idea of receiving, authenticating, and publishing data.
Turning to the second step, the Federal Circuit found that claim 1 did not contain an inventive concept sufficient to transform the nature of the claim into a patent-eligible application. Again, the Federal Circuit summarily stated that the "elements of claim 1 simply recite an abstract idea or an abstract idea executed using computer technology" with no explanation.
EasyWeb argued that an inventive concept arises from the ordered combination of steps in claim 1, but the Federal Circuit disagreed. The Federal Circuit stated that Claim 1 "recites the most basic of steps in data collection, analysis, and publication and they are recited in the ordinary order." The Federal Circuit concluded by finding that "all the claims are directed to the abstract idea of receiving, authenticating, and publishing data, and fail to recite any inventive concepts sufficient to transform the abstract idea into a patent eligible invention."
It's easy to understand the Federal Circuit's opinion with respect to the first and last functions in claim 1 (e.g., to identify the sender of the message and publish the converted second portion of the message), but the Federal Circuit did not comment at all on the middle step to "convert at least a second portion of the message from the first format to a second format." At least in that step, some data processing occurs that is not encompassed by the alleged abstract idea of receiving, authenticating, and publishing data as characterized by the Court. That is not to say that the broad feature of "converting data" from a first format to a second format is new in any way, but it at least recites more than found in the prior cases where claims were held to be abstract because the claims only recited "collecting information, analyzing it, and displaying certain results of the collection and analysis." It would seem that converting data is distinguished over the more generic "analyzing" data. Clearly, though, if claim 1 recited more details for how the conversion was performed, the claim would be stronger and more likely to withstand § 101 challenges. But the fact that the Federal Circuit ignored this feature and summarily rejected all claims is disappointing.
Panel: Circuit Judges Lourie, Moore, and Hughes
Posted at 11:50 PM in Federal Circuit, Patentable Subject Matter | Permalink | Comments (0)
Posted at 10:25 PM in Patent Legislation, Patentable Subject Matter | Permalink | Comments (6)
Posted at 11:21 PM in Federal Circuit, Patentable Subject Matter | Permalink | Comments (10)
Recognicorp, LLC v. Nintendo Co. (Fed. Cir. 2017)
Recognicorp, owner of U.S. Patent No. 8,005,303, sued Nintendo for infringement in the U.S. District Court for the District of Oregon. After a transfer to the U.S. District Court for the Western District of Washington and reexamination proceedings in the U.S. Patent and Trademark Office, Nintendo moved for judgment on the pleadings. Particularly, Nintendo asserted that the patent's claims recited ineligible subject matter under 35 U.S.C. § 101. The District Court agreed, and Recognicorp appealed to the Federal Circuit.
Claim 1 of the '303 patent recites:
As described by the Court, storing facial images in traditional file formats (e.g., bitmaps, JPEGs, and GIFs) is inefficient due to the large resulting file sizes, and compressing these files often decreases image quality. The '303 patent, however, "solves this problem by encoding the image at one end through a variety of image classes that required less memory and bandwidth, and at the other end decoding the images."
The District Court, prior to claim construction, stated that the claims are "directed to the abstract idea of encoding and decoding composite facial images using a mathematical formula." The District Court made an analogy between the claimed invention and painting by numbers to support this conclusion. Regarding part two of the Alice test, the District Court concluded that "the entirety of the '303 Patent consists of the encoding algorithm itself or purely conventional or obvious pre-solution activity and post-solution activity insufficient to transform the unpatentable abstract idea into a patent-eligible application."
On review, the Federal Circuit generally agreed. Considering part one of Alice, the Court characterized the invention as being directed to an even broader abstract idea -- that of "encoding and decoding image data." The Court acknowledged that the claim recites a specific type of encoding and decoding, but stated that encoding and decoding of information is "an abstract concept long utilized to transmit information."
Recognicorp invoked Enfish v. Microsoft to support its position that "the district court mischaracterized the invention using an improperly high level of abstraction that ignored the particular encoding process recited by the claims." But the Court disagreed in a conclusory fashion, stating that the claims are "clearly directed to encoding and decoding image data," and that "claim 1 does not claim a software method that improves the functioning of a computer." This latter statement was made despite the Court implying that the invention solved a technical problem related to digital image encoding and transmission just a few pages earlier. The only reasoning the Court used to support its holding was that claim 1 was similar to the claims of Digitech Image Technologies v. Electronics for Imaging, where an invention directed to organizing information through mathematical correlations was found to be abstract.
Moving on to part two of Alice, the Court rebutted Recognicorp's argument that "facial feature element codes" and "pictorial entity symbols" in the claims (the latter not in claim 1) rendered the claims patent-eligible. Particularly, the Court found these additional elements also to be abstract, and noted that adding more abstract elements to an abstract idea does not lift a claim over the § 101 hurdle. The Court also noted that claim 1 did not require computer implementation, and could be performed by hand. Another claim of the '303 patent did make use of a computer, but "it does exactly what we have warned it may not: tell a user to take an abstract idea and apply it with a computer."
Consequently, the Court concluded that there was no inventive concept in the claims, they failed the Alice test, and were invalid under § 101.
For the better part of a year, it has been understood that an invention that improves the operation of a computer or another technology is not abstract under § 101, and one should review the specification to make this determination. While this case does not exactly throw that notion under the bus, it may serve to narrow the holdings of Enfish and McRO v. Bandai Namco Games America. Here, the Court refused to acknowledge the possibility that the claimed invention resulted in such an improvement, and did not analyze the specification in detail.
Further, the disconnect between the Court's characterization of the claims under part one of Alice and the actual claimed invention is remarkable. In the Court's view, there was no substantive difference between claim 1 and "Morse code, ordering food at a fast food restaurant via a numbering system, and Paul Revere's one if by land, two if by sea signaling system." As many have noted, evaluating claims at such a high level does violence to the actual invention, which is the specific method recited by the claim. Indeed, Enfish and McRo specifically warned against over-generalizing claims and reducing them to a subjective "gist" in part one of the Alice analysis.
Taking a step back, claim 1 is broader in substance than it might appear at first blush, and perhaps that breadth and its lack of specificity regarding exactly how the encoding is performed doomed the claims to abstractness. So all is not lost for image processing and data compression inventions. Many will be clearly patent-eligible, especially ones that claim specific solutions to specific problems and result in a technological improvement. But, as we have learned over the last several years, the proverbial devil is in the details.
Panel: Circuit Judges Lourie, Reyna, and Stoll
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