Tuesday, 21 October 2014 17:03

Software Patentability after Alice Corp v. CLS Bank

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In the aftermath of the Supreme Court decision in Alice Corp v. CLS Bank, we have been keeping a close eye on Federal Circuit and PTAB decisions for further clarification on the case's more stringent test regarding patent-eligibility under 35 USC 101. In this article we note several post-Alice developments regarding the patent eligibility of software processes that may fall in the category of "abstract ideas".

As discussed previously in our blog, patent claims must meet a two-step test in order to overcome the initial threshold test of patent eligibility under 35 USC 101:

First, it must be determined whether the claims are directed to a patent-ineligible "law of nature", "natural phenomenon", or "abstract idea".

Second, if the claims fall within one of these three areas, the next determination is whether any additional claim elements transform the nature of the claim into an otherwise patent-eligible invention that is "significantly more" than the ineligible concept itself.

In Digitech Image Technologies, LLC v. Electronics for Imaging, Inc. (July 11, 2014), the Federal Circuit granted defendants' motions for summary judgment of invalidity, finding all asserted claims were subject matter ineligible. The claim in question recited a process of taking two data sets and combining them into a single data set, the device profile. According to the panel, the claim recited an ineligible abstract process of gathering and combining data that did not require input from a physical device. Without additional limitations, a process that employed mathematical algorithms to manipulate existing information to generate additional information was not patent eligible.

In Planet Bingo LLC v. VKGS LLC, Fed. Cir. Case 2013-1663 (August 26, 2014), the Federal Circuit found invalid a computer-aided method and system for managing a game of bingo. The claims generally recited storing a player's preferred sets of bingo numbers, retrieved set(s) upon demand, played the set(s), while simultaneoulsy tracking the player's sets, payments, and verifying winning numbers. Because these steps were directed to an abstract idea, and because the mere implementation of the game of bingo on a generic computer was not a sufficient "inventive concept", the claims were found to be patent ineligible.

As a result of Alice v. CLS Bank, patent assertion entities, such as Lumen View Technoology, have also began to voluntarily dismiss less sound patent appeals in front of the Federal Circuit. One example being US Patent 8,069,073, which claimed a system and method for facilitating bilateral and multilateral decision making.  Indeed, according to legal analytics firm Lex Machina, new patent litigation filings have been down 40% since September 2013. 

Does all this mean that the era of software inventions is at an end?  Hardly.  What Alice v. CLS Bank has rejected is the prior analysis of the Federal Circuit and US PTO that effectively allowed for the patenting of any system or method where the inventors relied on only a minutia of underlying hardware to transform an otherwise abstract idea into a patentable invention.  Thus, a substantial number of patents issued within the last decade are on a shaky footing and may no longer be enforceable today.  However, this shift merely illustrates the patent system rebalancing itself.  

It is important to note that Alice v. Bancorp was not decided in a vacuum. While the collective decisions in Alice v. CLS Bank (2014), Association of Molecular Pathology v. Myraid (2013), Mayo v. Prometheus (2012), and Bilski v. Kappos (2010) may have collectively overruled a decade of Federal Circuit precedent and US PTO practice, they also bring new life to established Supreme Court precendent in Diamond v. Diehr (1981), Diamond v. Chakrabarty (1980), Parker v. Flook (1978) and Gottschalk v. Benson (1972), which trace back to over a century of long-standing Supreme Court doctrine on patent eligibility.

Indeed, the number of software related patents being invalidated today either (1) do not recite sufficient limitations as to the hardware or physical components required for their implementation; or (2) merely combine an already known idea, i.e. playing bingo, with a general purpose computer.  Going forward, practitioners should claim software-related inventions concisely, clearly, and set out distinct hardware components required for their implementation, even if that hardware is a general purpose computer installed with a LAMP solution stack.

Inventors and practitioners should be reminded that 35 USC 101 is merely a threshold test of patent eligibility for the "new and useful", and not an end for otherwise meritorious software inventions.

Read 2953 times Last modified on Tuesday, 21 October 2014 17:38
Tony Guo

As a Registered Patent Attorney, Mr. Guo concentrates his practice in Patent Prosecution and Intellectual Property Litigation.  Mr. Guo has considerable hardware and software development experience, having worked in both development and IT roles for organizations such as Silicon Graphics International, Société Générale, and the University of Miami.  Mr. Guo earned his bachelor's degree in Computer Engineering from Purdue University, and his law degree, with honors, from the University of Miami School of Law.