This decision should be very interesting to software developers who want software patents on unique graphical user interfaces. The decision is non-precedential, but can be cited to the U.S. Patent and Trademark Office when the facts in a patent application uniquely match those in this case. Up until this case, and after Alice, the Federal Circuit had consistently found the claims to user interfaces patent-ineligible, reasoning that generically claimed user interfaces that merely present information that had been collected and analyzed are ineligible.
Trading Technologies International, Inc. charged CQG with infringement of U.S. Patent Nos. 6,772,132 and 6,766,304. CQG appealed the decision of the district court that the patents recite patent-eligible subject matter.
The software patents describe and claim a method and system for the electronic trading of stocks, bonds, futures, options and similar products. The software patents explain problems that arise when 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. The software patents describe a trading system in which a graphical user interface displays the market depth of a commodity traded in a market, including a dynamic display for a plurality of bids and for a plurality of asks in the market for the commodity and a static display of prices corresponding to the plurality of bids and asks. Bid 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.
Claim 1 of the ‘304 software patent is representative:
1. A method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on a graphical user interface, the method comprising;
- dynamically displaying a first indicator in one of a plurality of locations in a bid display region, each location in the bid display region corresponding to a price level along a common static price axis, the first indicator representing quantity associated with at least one order to buy the commodity at the highest bid price currently available in the market;
- dynamically displaying a second indicator in one of a plurality of locations in an ask display region, each location in the ask display region corresponding to a price level along the common static price axis, the second indicator representing quantity associated with at least one order to sell the commodity at the lowest ask price currently available in the market;
- displaying the bid and ask display regions in relation to fixed price levels positioned along the common static price axis such that when the inside market changes, the price levels along the common static price axis do not move and at least one of the first and second indicators moves in the bid or ask display regions relative to the common static price axis;
- displaying an order entry region comprising a plurality of locations for receiving commands to send trade orders, each location corresponding to a price level along the common static price axis; and
- in response to a selection of a particular location of the order entry region by a single action of a user input device, setting a plurality of parameters for a trade order relating to the commodity and sending the trade order to the electronic exchange.
Alice Corporation Pty. Ltd. v. CLS Bank International, provides the framework for patent-eligibility of business methods and software patents. A software patent’s claim falls outside § 101 where (1) it is “directed to” a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2), if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the nature of the claim’ into a patent-eligible application.”
The district court first applied Step 1 of this framework. The district court held that, rather than reciting a mathematical algorithm, a fundamental economic or longstanding commercial practice, or a challenge in business, the challenged software patents solve problems of prior graphical user interface devices . . . in the context of computerized trading relating to speed, accuracy and usability.
The district court found that these patents are directed to improvements in existing graphical user interface devices that have no “pre-electronic trading analog,” and recite more than “‘setting, displaying, and selecting’ data or information that is visible on the [graphical user interface] device.” Id.
The district court explained that the challenged patents do not simply claim displaying information on a graphical user interface. The claims require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art. The district court concluded that the patented subject matter meets the eligibility standards of Alice Step 1.
The Federal Circuit agreed with this conclusion, for all of the reasons articulated by the district court.
The district court alternatively continued the analysis under Alice Step 2, and determined that the challenged claims recite an “inventive concept.”
The court identified the static price index as an inventive concept that allows traders to more efficiently and accurately place trades using this electronic trading system. The court distinguished this system from the routine or conventional use of computers or the Internet, and concluded that the specific structure and concordant functionality of the graphical user interface are removed from abstract ideas, as compared to conventional computer implementations of known procedures. Thus the district court held that the criteria of Alice Step 2 were also met.
The Federal Circuit stated that the district court’s rulings are in accord with precedent for software patents. Precedent has recognized that specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter. In DDR Holdings, LLC v. Hotels.com, the Federal Circuit upheld the patent eligibility of software patent claims necessarily rooted in computer technology that overcome a problem specifically arising in the realm of computer networks. Similarly, claimed processes using a combined order of specific rules” that improved on existing technological processes were deemed patent-eligible in McRO, Inc. v. Bandai Namco Games America Inc.. Claims that were directed to a specific improvement to the way computers operate, embodied in a self-referential table, were deemed eligible in Enfish, LLC v. Microsoft Corp. These software patent cases are described below in this blog.
The Federal Circuit pointed out that, for some computer-implemented methods, software may be essential to conduct the contemplated improvements, as indicated by Enfish. “Much of the advancement made in computer technology consists of improvements to software that, by their very nature, may not be defined by particular physical features but rather by logical structures and processes.”). Abstraction is avoided or overcome when a proposed new application or computer-implemented function is not simply the generalized use of a computer as a tool to conduct a known or obvious process, but instead is an improvement to the capability of the system as a whole.
The Federal Circuit reiterated the Court’s recognition that “at some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” per Alice. This threshold level of eligibility is often usefully explored by way of the substantive statutory criteria of patentability, for an invention that is new, useful and unobvious is more readily distinguished from the generalized knowledge that characterizes ineligible subject matter. This analysis is facilitated by the Court’s guidance in Alice whereby the claims are viewed in accordance with “the general rule that patent claims ‘must be considered as a whole’.”
This decision should be considered when attempting to patent software that includes a graphical user interface.