December 16, 2014 Interim Guidelines on Subject Matter Eligibility of Software Patents

The United States Patent and Trademark Office has prepared interim guidance (2014 Interim Guidance on Patent Subject Matter Eligibility, called “Interim Eligibility Guidance”) for use by USPTO personnel in determining subject matter eligibility under 35 U.S.C. 101 in view of recent decisions by the U.S. Supreme Court (Supreme Court) such as Alice, Myriad, and Mayo.

The guidelines provide the following flowchart:

(Step 1) Is the claim to a process, machine, manufacture or composition of matter?
If so, proceed to Step 2A. If not, the claim is not eligible subject matter under 35 USC 101.

(Step 2A) [Part 1 Mayo test] Is the claim directed to a law of nature, a natural phenomenon, or an abstract idea (judicially recognized exceptions)?. If so, proceed to Step 2B. If not, the claim qualifies as eligible subject matter under 35 USC 101.

(Step 2B) [Part 2 Mayo test] Does the claim recite additional elements that amount to significantly more than the judicial exception? If so, the claim qualifies as eligible subject matter. If not, the claim is not eligible subject matter.

Two–part Analysis for Judicial Exceptions
A. Flowchart Step 2A (Part 1 Mayo Test) – Determine whether the claim is
directed to a law of nature, a natural phenomenon, or an abstract idea (judicial
exceptions).

A claim is directed to a judicial exception when a law of nature, a natural phenomenon,
or an abstract idea is recited (i.e., set forth or described) in the claim. Such a claim
requires closer scrutiny for eligibility because of the risk that it will “tie up” the excepted
subject matter and pre-empt others from using the law of nature, natural phenomenon, or
abstract idea. Courts tread carefully in scrutinizing such claims because at some level all
inventions embody, use, reflect, rest upon, or apply a law of nature, natural phenomenon,
or abstract idea. To properly interpret the claim, it is important to understand what the
applicant has invented and is seeking to patent.

For claims that may recite a judicial exception, but are directed to inventions that clearly
do not seek to tie up the judicial exception, see below regarding a streamlined
eligibility analysis.

It should be noted that there are no bright lines between the types of exceptions
because many of these concepts can fall under several exceptions. For example,
mathematical formulas are considered to be an exception as they express a scientific
truth, but have been labelled by the courts as both abstract ideas and laws of nature.
Likewise, “products of nature” are considered to be an exception because they tie up the
use of naturally occurring things, but have been labelled as both laws of nature and
natural phenomena. Thus, it is sufficient for this analysis to identify that the claimed
concept aligns with at least one judicial exception.

Laws of nature and natural phenomena, as identified by the courts, include naturally
occurring principles/substances and substances that do not have markedly different
characteristics compared to what occurs in nature. The types of concepts
courts have found to be laws of nature and natural phenomena are shown by these cases,
which are intended to be illustrative and not limiting:
• an isolated DNA (see the Myriad case);
• a correlation that is the consequence of how a certain compound is metabolized
by the body (Mayo);
• electromagnetism to transmit signals (Morse); and
• the chemical principle underlying the union between fatty elements and water
(Tilghman).

Abstract ideas have been identified by the courts by way of example, including
fundamental economic practices, certain methods of organizing human activities, an idea
‘of itself,’ and mathematical relationships/formulas. The types of concepts courts have
found to be abstract ideas are shown by these cases, which are intended to be illustrative
and not limiting:
• mitigating settlement risk (Alice);
• hedging (Bilski);
• creating a contractual relationship (buySAFE);
• using advertising as an exchange or currency (Ultramercial);
• processing information through a clearinghouse (Dealertrack);
• comparing new and stored information and using rules to identify options
(SmartGene);
• using categories to organize, store and transmit information (Cyberfone);
• organizing information through mathematical correlations (Digitech);
• managing a game of bingo (Planet Bingo);
• the Arrhenius equation for calculating the cure time of rubber (Diehr);
• a formula for updating alarm limits (Flook);
• a mathematical formula relating to standing wave phenomena (Mackay Radio); and
• a mathematical procedure for converting one form of numerical representation to
another (Benson)

Nature-based Products
a. Determine Whether The Markedly Different Characteristics Analysis Is
Needed To Evaluate a Nature-Based Product Limitation Recited in a Claim

Nature-based products, as used herein, include both eligible and ineligible products and
merely refer to the types of products subject to the markedly different characteristics
analysis used to identify “product of nature” exceptions. Courts have held that naturally
occurring products and some man-made products that are essentially no different from a
naturally occurring product are “products of nature” that fall under the laws of nature or
natural phenomena exception. To determine whether a claim that includes a nature-based
product limitation recites a “product of nature” exception, use the markedly different
characteristics analysis to evaluate the nature-based product limitation. A claim that recites a nature-based product limitation that does not
exhibit markedly different characteristics from its naturally occurring counterpart in its
natural state is directed to a “product of nature” exception (Step 2A: YES).

Care should be taken not to overly extend the markedly different characteristics analysis
to products that when viewed as a whole are not nature-based.

A nature-based product can be claimed by itself (e.g., “a Lactobacillus bacterium”) or as
one or more limitations of a claim (e.g., “a probiotic composition comprising a mixture of
Lactobacillus and milk in a container”). The markedly different characteristics analysis
should be applied only to the nature-based product limitations in the claim to determine
whether the nature-based products are “product of nature” exceptions. When the naturebased
product is produced by combining multiple components, the markedly different
characteristics analysis should be applied to the resultant nature-based combination,
rather than its component parts. In the example above, the mixture of Lactobacillus and
milk should be analyzed for markedly different characteristics, rather than the
Lactobacillus separately and the milk separately. The container would not be subject to
the markedly different characteristics analysis as it is not a nature-based product, but
would be evaluated in Step 2B if it is determined that the mixture of Lactobacillus and
milk does not have markedly different characteristics from any naturally occurring
counterpart and thus is a “product of nature” exception.

For a product-by-process claim, the analysis turns on whether the nature-based product in
the claim has markedly different characteristics from its naturally occurring counterpart.
(See MPEP 2113 for product-by-process claims.)

A process claim is not subject to the markedly different analysis for nature-based
products used in the process, except in the limited situation where a process claim is
drafted in such a way26 that there is no difference in substance from a product claim (e.g.,
“a method of providing an apple.”).

The markedly different characteristics analysis compares the nature-based product
limitation to its naturally occurring counterpart in its natural state. When there is no
naturally occurring counterpart to the nature-based product, the comparison should be
made to the closest naturally occurring counterpart. In the case of a nature-based
combination, the closest counterpart may be the individual nature-based components that
form the combination, i.e., the characteristics of the claimed nature-based combination
are compared to the characteristics of the components in their natural state.

Markedly different characteristics can be expressed as the product’s structure, function,
and/or other properties,28 and will be evaluated based on what is recited in the claim on a
case-by-case basis. As seen by the examples that are being released in conjunction with
this Interim Eligibility Guidance, even a small change can result in markedly different
characteristics from the product’s naturally occurring counterpart. In accordance with
this analysis, a product that is purified or isolated, for example, will be eligible when
there is a resultant change in characteristics sufficient to show a marked difference from
the product’s naturally occurring counterpart. If the claim recites a nature-based product
limitation that does not exhibit markedly different characteristics, the claim is directed to
a “product of nature” exception (a law of nature or naturally occurring phenomenon), and
the claim will require further analysis to determine eligibility based on whether additional
elements add significantly more to the exception.

Non-limiting examples of the types of characteristics considered by the courts when
determining whether there is a marked difference include:

• Biological or pharmacological functions or activities;
• Chemical and physical properties;
• Phenotype, including functional and structural characteristics; and
• Structure and form, whether chemical, genetic or physical.

If the claim includes a nature-based product that has markedly different characteristics,
the claim does not recite a “product of nature” exception and is eligible (Step 2A: NO)
unless the claim recites another exception (such as a law of nature or abstract idea, or a
different natural phenomenon). If the claim includes a product having no markedly
different characteristics from the product’s naturally occurring counterpart in its natural
state, the claim is directed to an exception (Step 2A: YES), and the eligibility analysis
must proceed to Step 2B to determine if any additional elements in the claim add
significantly more to the exception. For claims that are to a single nature-based product,
once a markedly different characteristic in that product is shown, no further analysis
would be necessary for eligibility because no “product of nature” exception is recited
(i.e., Step 2B is not necessary because the answer to Step 2A is NO). This is a change
from prior guidance because the inquiry as to whether the claim amounts to significantly
more than a “product of nature” exception is not relevant to claims that do not recite an
exception. Thus, a claim can be found eligible based solely on a showing that the naturebased
product in the claim has markedly different characteristics and thus is not a
“product of nature” exception, when no other exception is recited in the claim.

If a rejection under 35 U.S.C. 101 is ultimately made, the rejection should identify the
exception as it is recited (i.e., set forth or described) in the claim, and explain why it is an
exception providing reasons why the product does not have markedly different
characteristics from its naturally occurring counterpart in its natural state.

Flowchart Step 2B (Part 2 Mayo test) – Determine whether any element, or
combination of elements, in the claim is sufficient to ensure that the claim
amounts to significantly more than the judicial exception.

A claim directed to a judicial exception must be analyzed to determine whether the
elements of the claim, considered both individually and as an ordered combination, are
sufficient to ensure that the claim as a whole amounts to significantly more than the
exception itself – this has been termed a search for an “inventive concept.” To be
patent-eligible, a claim that is directed to a judicial exception must include additional
features to ensure that the claim describes a process or product that applies the exception
in a meaningful way, such that it is more than a drafting effort designed to monopolize
the exception. It is important to consider the claim as whole. Individual elements viewed
on their own may not appear to add significantly more to the claim, but when combined
may amount to significantly more than the exception. Every claim must be examined
individually, based on the particular elements recited therein, and should not be judged to
automatically stand or fall with similar claims in an application.

The Supreme Court has identified a number of considerations for determining whether a
claim with additional elements amounts to significantly more than the judicial exception
itself. The following are examples of these considerations, which are not intended to be
exclusive or limiting. Limitations that may be enough to qualify as “significantly more”
when recited in a claim with a judicial exception include:
• Improvements to another technology or technical field;
• Improvements to the functioning of the computer itself;
• Applying the judicial exception with, or by use of, a particular machine;
• Effecting a transformation or reduction of a particular article to a different state or
thing;
• Adding a specific limitation other than what is well-understood, routine and
conventional in the field, or adding unconventional steps that confine the claim to
a particular useful application; or
• Other meaningful limitations beyond generally linking the use of the judicial
exception to a particular technological environment.

Limitations that were found not to be enough to qualify as “significantly more” when
recited in a claim with a judicial exception include:
• Adding the words “apply it” (or an equivalent) with the judicial exception, or
mere instructions to implement an abstract idea on a computer;
• Simply appending well-understood, routine and conventional activities previously
known to the industry, specified at a high level of generality, to the judicial
exception, e.g., a claim to an abstract idea requiring no more than a generic
computer to perform generic computer functions that are well-understood, routine
and conventional activities previously known to the industry;
• Adding insignificant extrasolution activity to the judicial exception, e.g., mere
data gathering in conjunction with a law of nature or abstract idea; or
• Generally linking the use of the judicial exception to a particular technological
environment or field of use.

For a claim that is directed to a plurality of exceptions, conduct the eligibility analysis for
one of the exceptions. If the claim recites an element or combination of elements that
amount to significantly more than that exception, consider whether those additional
elements also amount to significantly more for the other claimed exception(s), which
ensures that the claim does not have a pre-emptive effect with respect to any of the
recited exceptions. Additional elements that satisfy Step 2B for one exception will likely
satisfy Step 2B for all exceptions in a claim. On the other hand, if the claim fails under
Step 2B for one exception, the claim is ineligible, and no further eligibility analysis is
needed.

The Interim Guidelines provide for a Streamlined Eligibility Analysis as follows.
For purposes of efficiency in examination, a streamlined eligibility analysis can be used
for a claim that may or may not recite a judicial exception but, when viewed as a whole,
clearly does not seek to tie up any judicial exception such that others cannot practice it.
Such claims do not need to proceed through the full analysis herein as their eligibility
will be self-evident. However, if there is doubt as to whether the applicant is effectively
seeking coverage for a judicial exception itself, the full analysis should be conducted to
determine whether the claim recites significantly more than the judicial exception.

For instance, a claim directed to a complex manufactured industrial product or process
that recites meaningful limitations along with a judicial exception may sufficiently limit
its practical application so that a full eligibility analysis is not needed. As an example, a
robotic arm assembly having a control system that operates using certain mathematical
relationships is clearly not an attempt to tie up use of the mathematical relationships and
would not require a full analysis to determine eligibility. Also, a claim that recites a
nature-based product, but clearly does not attempt to tie up the nature-based product,
does not require a markedly different characteristics analysis to identify a “product of
nature” exception. As an example, a claim directed to an artificial hip prosthesis coated
with a naturally occurring mineral is not an attempt to tie up the mineral. Similarly,
claimed products that merely include ancillary nature-based components, such as a claim that is directed to a cellphone with an electrical contact made of gold or a plastic chair
with wood trim, would not require analysis of the nature-based component to identify a
“product of nature” exception because such claims do not attempt to improperly tie up the
nature-based product.

Regardless of whether a rejection under 35 U.S.C. 101 is made, a complete examination
should be made for every claim under each of the other patentability requirements: 35 U.S.C. 102, 103, 112, and 101 (utility, inventorship and double patenting) and nonstatutory
double patenting.

The guidelines also provide sample analyses based upon earlier Supreme Court decisions.

The December 16, 2014 Interim Guidance can be found here:
https://www.federalregister.gov/articles/2014/12/16/2014-29414/2014-interim-guidance-on-patent-subject-matter-eligibility

Post-Alice Decision on Software Patents, Ultramercial Inc. v. Hulu LLC, Federal Circuit 2014

Ultramercial sued Hulu, YouTube, and WildTangent in 2009 for infringement of a patent related to distributing copyrighted material over the Internet to a consumer at no cost in exchange for viewing an advertisement, with the advertiser paying for the copyrighted material.

WildTangent filed a motion to dismiss, alleging that the claims were not statutory under 35 U.S.C. § 101.  The district court granted the motion.  The Federal Circuit reversed.  The Supreme Court vacated the decision and
remanded for consideration in view of its decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc.  A unanimous panel of the Federal Circuit again held the claims to be statutory.  WildTangent petitioned for Supreme Court review.  The Supreme Court again vacated the Federal Circuit’s decision and remanded for consideration in view of its more recent decision in Alice v. CLS Bank.  Judge Rader, a voice of reason, had since resigned and Judge Mayer was appointed to take his place.

Claim 1 of the patent recites:

A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

  • a first step of receiving, from a content provider, media products that are covered by intellectual property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;
  • a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message;
  • a third step of providing the media product for sale at an Internet website;
  • a fourth step of restricting general public access to said media product;
  • a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message;
  • a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;
  • a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer;
  • an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message;
  • a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;
  • a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and
  • an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

According to Alice, the two prong circular logic of Mayo is to be used to determine if claims are directed to statutory subject matter.  The first prong is to determine whether the claims are directed to a patent-ineligible law of nature, natural phenomenon, or abstract idea.   If so, the second prong is to determine whether any additional claim elements transform the claim into a patent-eligible application that amounts to significantly more than the ineligible concept itself.  No definition has been provided by the Supreme Court as to when an idea is abstract.  Similarly, no definition has been provided as to what amounts to “significantly more.”

In this case, the court conceptualized the claim as relating distributing copyrighted material over the Internet to a consumer at no cost in exchange for viewing an advertisement, with the advertiser paying for the copyrighted material.  The court ignored details of the claim in considering the first prong.

According to the Federal Circuit, claim 1 provided an “ordered combination of steps reciting an abstraction — an idea, having no particular concrete or tangible form.”  In addition, “[t]he process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an
abstract idea, devoid of a concrete or tangible application.”  While the Court did state that “certain additional limitations, such as consulting an activity log, add a degree of particularity,” these limitations were insufficient to provide significantly more.

Further, even though some steps of the claim “were not previously employed in this art [that] is not enough — standing alone — to confer patent eligibility upon the claims at issue.”

This decision puts patent applicants in a difficult position.  Adding novel subject matter to a claim is not sufficient to render a claim statutory.

“Adding routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet does not transform an otherwise abstract idea into patent-eligible subject matter.”  Even though the claim recited use of the Internet, which is arguably a concrete, tangible system, the Court reiterated its reasoning from CyberSource Corp. v. Retail Decisions, Inc., stating that “use of the Internet is not sufficient to save otherwise abstract claims from ineligibility under § 101.”

Further, the Federal Circuit held that Ultramercial’s claims failed both prongs of the machine-or-transformation test.  The only machine recited in the claims was the Internet, which is a “ubiquitous information-transmitting medium, not a novel machine.”  As for any sort of transformation elicited by the many steps of claim 1, the Court wrote that “manipulations of public or private legal obligations or relationships, business risks, or other such abstractions” are not transformations “because they are not physical objects or substances, and they are not representative of physical objects or substances.”

Consequently, all of Ultramercial’s claims were invalid.  The point of Alice seemed to be to allow courts to avoid a complicated novelty analysis if the only hardware in claims was a computer.  The reasoning seemed to be that adding a computer to a conventional process was insufficient to make the claim statutory.  However, in this case there was novelty in the claim that was ignored.

Adapting to this case would seem to require passing the machine or transformation test using more machines than are included in the Internet.

Post-Alice Decision on Software Patents, buySAFE v. Google, 2014

In buySAFE v. Google, decided by the Federal Circuit on September 3, 2014, claims were held to be invalid as non-statutory in view of 35 U.S.C. 101.  The Federal Circuit affirmed the district court’s grant of the defendant’s motion to dismiss.

U.S. Patent No. 7,644,019, owned by buySAFE, Inc., claims methods and machine-readable media encoded to  perform steps for guaranteeing a party’s performance of  its online transaction.

A representative method claim is claim 1, which recites:

A method, comprising:
     receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;
     processing, by at least one computer application program running on the safe transaction service
provider computer, the request by underwriting the first party in order to provide the transaction
performance guaranty service to the first party, wherein the computer of the safe transaction
service provider offers, via a computer network, the transaction performance guaranty service that
binds a transaction performance guaranty to the online commercial transaction involving the first
party to guarantee the performance of the first party following closing of the online commercial transaction.
The Federal Circuit noted that laws of nature, natural phenomena, and abstract ideas, no matter how
groundbreaking, innovative, or even brilliant,  are outside what the statute means by “new and useful process, machine, manufacture, or composition of matter,” 35 U.S.C. § 101. See Alice, 134 S. Ct.
at 2357; Myriad, 133 S. Ct. at 2116, 2117.

The Federal Circuit then stated that defining the excluded categories, the Supreme Court has ruled that the exclusion applies if a claim involves a natural law or phenomenon or abstract idea, even if the particular natural law or phenomenon or abstract idea at issue is narrow. Mayo, 132 S. Ct. at 1303. Mayo explained the point with reference to both natural laws and one kind of abstract idea, namely,
mathematical concepts.

A claim that directly reads on matter in the three identified categories is outside section 101. But the provision also excludes the subject matter of certain claims that by their terms read on a human-made physical thing (“machine, manufacture, or composition of matter”) or a human-controlled
series of physical acts (“process”) rather than laws of nature, natural phenomena, and abstract ideas. Such a claim falls outside section 101 if (a) it is “directed to” matter in one of the three excluded categories and (b) “the additional elements” do not supply an “inventive concept” in the physical realm of things and acts—a “new and useful application” of the ineligible matter in the physical
realm—that ensures that the patent is on something “significantly more than” the ineligible matter itself, according to the Federal Circuit, in interpreting Alice.

According to the Federal Circuit, the relevant Supreme Court cases are those which find an abstract idea in certain arrangements involving contractual relations, which are intangible entities. Bilski v. Kappos, 561 U.S. 593 (2010), involved a method of entering into contracts to hedge risk in commodity prices, and Alice involved methods and systems for “exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk,” Alice, 134 S. Ct. at 2356. More narrowly, the Court in both cases relied on the fact that the contractual relations at issue constituted “a fundamental economic practice long prevalent in our system of commerce.” Bilski, 561 U.S. at 611; see Alice, 134 S. Ct. at 2356, 2357.

The Federal Circuit went on to say that in simultaneously rejecting a general business method exception to patent eligibility and finding the hedging claims invalid, moreover, Bilski makes clear that the recognition that the formation or manipulation of economic relations may involve an abstract idea does not amount to creation of a business-method exception. The required section 101 inquiry has a second step beyond identification of an abstract idea. If enough extra is included in a claim, it passes muster under section 101 even if it amounts to a “business method.”

The Supreme Court in Alice made clear that a claim directed to an abstract idea does not move into section 101 eligibility territory by “merely requiring generic computer implementation.”

The claims in this case, according to the Federal Circuit, do not push or even test the boundaries of the Supreme Court precedents under section 101. The claims are squarely about creating a contractual relationship—a “transaction performance guaranty”—that is beyond question of ancient lineage.

The Federal Circuit concluded that the claims thus are directed to an abstract idea.

The claims’ invocation of computers adds no inventive concept. The computer functionality is generic—indeed, quite limited: a computer receives a request for a guarantee and transmits an offer of guarantee in return. There is no further detail. That a computer receives and sends the information over a network—with no further specification— is not even arguably inventive. The computers in
Alice were receiving and sending information over networks connecting the intermediary to the other institutions involved, and the Court found the claimed role of the computers insufficient.

And it likewise cannot be enough that the transactions being guaranteed are themselves online
transactions. At best, that narrowing is an “attempt[] to limit the use” of the abstract guarantee idea “to a particular technological environment,” which has long been held insufficient to save a claim in this context.

According to the Federal Circuit, it is a straightforward matter to conclude that the claims in this case are invalid.

One thing disturbing about this case is the phrase “is not even arguably inventive” that the Federal Circuit used when describing the computer functionality.  If the Federal Circuit requires inventiveness in the hardware, all software patents are invalid.  I don’t think this is where we are headed, though.  They also used the term “functionality” which implies that method steps are part of the consideration.

Post-Alice Decision on Software Patents, Planet Bingo v. VKGS, 2014

In Planet Bingo v. VKGS, decided by the Federal Circuit on August 26, 2014, claims were held to be invalid as non-statutory in view of 35 U.S.C. 101.  The Federal Circuit affirmed the district court’s decision.

Planet Bingo, LLC, owns two patents for computer-aided management of bingo games. After Planet Bingo filed an infringement action against VKGS, the district court granted summary judgment of invalidity, concluding that the patents do not claim patentable subject matter under 35 U.S.C. § 101.

The Federal Circuit stated that because a straight-forward application of the Supreme Court’s recent holding in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), led them to the same result, they affirmed.

Generally, the claims recite storing a player’s preferred sets of bingo numbers; retrieving one such set upon demand, and playing that set; while simultaneously tracking the player’s sets, tracking player payments, and verifying winning numbers.

Following a Markman order, VKGS filed a motion for summary judgment that the asserted claims are directed to a patent-ineligible concept. Applying the majority opinion’s approach in CLS Bank International v. Alice Corp., the district court determined that “each method claim encompasses the abstract idea of managing/playing the game of Bingo.”

The Federal Circuit agreed with the district court that there was no meaningful distinction between the method and system claims or between the independent and dependent claims. According to the Federal Circuit, the system claims recite the same basic process as the method claims, and the dependent claims recite only slight variations of the independent claims.

The Federal Circuit stated that the claims here are similar to the claims at issue in Bilski v. Kappos, 130 S. Ct. 3218 (2010), and Alice, 134 S. Ct. 2347, which the Supreme Court held were directed to “abstract ideas.” For example, the claims here recite methods and systems for “managing a game of Bingo.” This is similar to the kind of “organizing human activity” at issue in Alice, 134 S. Ct. at 2356. And, although the ’646 and ’045 patents are not drawn to the same subject matter at issue in Bilski and Alice, these claims are directed to the abstract idea of “solv[ing a] tampering problem and also minimiz[ing] other security risks” during bingo ticket purchases. This is similar to the abstract ideas of “risk hedging” during “consumer transactions,” Bilski, 130 S. Ct. at 3231, and “mitigating settlement risk” in “financial transactions,” Alice, 134 S. Ct. at 2356–57, that the Supreme Court found ineligible. Thus, the Federal Circuit held that the subject matter claimed in the ’646 and ’045 patents were directed to an abstract idea.

Abstract ideas may still be patent-eligible if they contain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.”

Apart from managing a game of bingo, the claims at issue also require “a computer with a central processing unit,” “a memory,” “an input and output terminal,” “a printer,” in some cases “a video screen,” and “a program . . . enabling” the steps of managing a game of bingo.  These elements, in turn, select, store, and retrieve two sets of numbers, assign a player identifier and a control number, and then compare a winning set of bingo numbers with a selected set of bingo numbers.

“[I]f a patent’s recitation of a computer amounts to a mere instruction to ‘implemen[t]’ an abstract idea ‘on . . . a computer,’ . . . that addition cannot impart patent eligibility.” Alice, 134 S. Ct. at 2358 (quoting Mayo, 132 S. Ct. at 1301).  According to the Federal Circuit, in this case the claims recite a generic computer implementation of the covered abstract idea.

Post-Alice Decision on Software Patents, I/P Engine v. AOL, 2014

In I/P Engine v. AOL, 35 U.S.C. 101 was not addressed by the majority but a concurring opinion would have held the claims non-statutory in view of 35 U.S.C. 101.  The claims were held invalid as obvious.

I/P Engine, Inc. brought an action against AOL Inc., Google Inc., IAC Search & Media, Inc., Gannett Company, Inc., and Target Corporation alleging infringement of U.S. Patent Nos. 6,314,420 and 6,775,664. A jury returned a verdict finding that all asserted claims were infringed and not anticipated.

The ’420 and ’664 patents both claim priority to the same parent patent, U.S. Patent No. 5,867,799. They relate to a method for filtering Internet search results that utilizes both content-based and collaborative filtering.  Content-based filtering is a technique for determining relevance by extracting features such as text from an information item. By contrast, collaborative filtering assesses relevance based on feedback from other users—it looks to what items “other users with similar interests or needs found to be relevant.”

Apparatus claim 10 of the ’420 patent recites:

A search engine system comprising: a system for scanning a network to make a demand search for informons relevant to a query from an individual user; a content-based filter system for receiving the informons from the scanning system and for filtering the informons on the basis of applicable content profile data for relevance to the query; and a feedback system for receiving collaborative feedback data from system users relative to informons considered by such users; the filter system combining pertaining feedback data from the feedback system with the content profile data in filtering each informon for relevance to the query.

Apparatus claim 1 of the ’664 patent provides:

A search system comprising: a scanning system for searching for information relevant to a query associated with a first user in a plurality of users; a feedback system for receiving information found to be relevant to the query by other users; and a content-based filter system for combining the information from the feedback system with the information from the scanning system and for filtering the combined information for relevance to at least one of the query and the first user.

Claim 26 of the ’664 patent is similar to claim 1, but cast as a method claim:

A method for obtaining information relevant to a first user comprising: searching for information relevant to a query associated with a first user in a plurality of users; receiving information found to be relevant to the query by other users; combining the information found to be relevant to the query by other users with the searched information; and content-based filtering the combined information for relevance to at least one of the query and the first user.

The Google Defendants argued that I/P Engine’s claimed invention is obvious as a matter of law because it simply combines content-based and collaborative filtering, two information filtering methods that were well-known in the art.  The Federal Circuit agreed and stated that no reasonable jury could conclude otherwise.

Just Mayer concurred, stating because the claims asserted by I/P Engine disclose no new technology, but instead simply recite the use of a generic computer to implement a well-known and widely-practiced technique for organizing information, they fall outside the ambit of 35 U.S.C. § 101.  And if this determination had been made in the first instance as directed by the Supreme Court, litigation, and nearly two weeks of trial and imposition on citizen jurors, could have been avoided.

Post-Alice Decision on Software Patents, Digitech Image v. Electronics for Imaging, 2014

In Digitech Image v. Electronics for Imaging, decided by the Federal Circuit on July 11, 2014, claims were held to be invalid as non-statutory in view of 35 U.S.C. 101.  The Federal Circuit affirmed the district court’s decision.


This case concerned U.S. Patent No. 6,128,415 directed to a device profile and a method for creating a device profile within a digital image processing system. The district court concluded that the asserted claims were invalid under 35 U.S.C. § 101.

A representative apparatus claim of this software patent is as follows:

A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:
     first data for describing a device dependent transformation of color information content of the image to a device independent color space; and
     second data for describing a device dependent transformation of spatial in- formation content of the image in said device independent color space.

A representative method claim of this software patent is as follows:

A method of generating a device profile that describes properties of a device in a digital image reproduction system for capturing, transforming or rendering an image, said method comprising:
     generating first data for describing a device dependent transformation of col- or information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic functions;
     generating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space through use of spatial stimuli and de- vice response characteristic functions; and
     combining said first and second data in- to the device profile.

Digitech argued that a device profile is subject matter eligible because it is “hardware or software within a digital image processing system” and exists as a tag file appended to a digital image.  The Federal Circuit stated that Digitech’s position is not supported by the claim language, which does not describe the device profile as a tag or any other embodiment of hardware or software. The claims’ only description of the device profile is that it comprises “first data for describing” color information and “second data for describing” spatial information.

The Federal Circuit stated that the claims at issue here were even broader than the claim in Nuijten.

The Federal Circuit affirmed the decision of the district court.

USPTO Issues post-Alice Software Patent Examination Guidelines

The USPTO has issued preliminary guidelines for examination of software patent applications, and other patent applications, after the Supreme Court’s decision in Alice v. CLS Bank.  The Alice Supreme Court decision is discussed in another post.

The guidelines start by summarizing the Alice decision as follows:

The Court determined that Alice Corp.’s claims to methods were ineligible because “the claims at issue amount to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” Alice Corp.’s claims to computer systems and computer-readable storage media were held ineligible for substantially the same reasons, e.g., that the generically-recited computers in the claims add nothing of substance to the underlying abstract idea. Notably, Alice Corp. neither creates a per se excluded category of subject matter, such as software or business methods, nor imposes any special requirements for eligibility of software or business methods.

The guidelines go on to state that The Supreme Court made clear in Alice Corp. that it applies the framework set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. _ (2012) (Mayo), to analyze all claims directed to laws of nature, natural phenomena, and abstract ideas for subject matter eligibility under 35 U.S.c. § 101. The Mayo framework is currently being used by the USPTO to examine claims involving laws of nature, but had not been used for claims involving abstract ideas. Therefore, the new examination guidelines differ from prior USPTO guidance in two ways:
1) The Mayo analysis should be used for all types of judicial exceptions, whereas prior USPTO guidance applied a different (i.e., Bilski) analysis to claims with abstract ideas than to claims with laws of nature (Mayo guidance in MPEP 2106.01).
2) Alice Corp. also establishes that the same analysis should be used for all categories of claims (e.g., product and process claims), whereas prior guidance applied a different analysis to product claims involving abstract ideas (relying on tangibility) than to process claims (Bilski guidance).

For purposes of the preliminary guidelines, only claims that involve abstract ideas are
addressed, since the USPTO’s current guidance for claims that involve laws of nature/natural phenomena already uses the Mayo framework.

The examination guidelines state that, following Alice Corp., Examiners are now to analyze all claims (product and process) having an abstract idea using the following two-part analysis set forth in Mayo :
Part 1: Determine whether the claim is directed to an abstract idea.
Part 2: If an abstract idea is present in the claim, determine whether
any element, or combination of elements, in the claim is sufficient to
ensure that the claim amounts to significantly more than the abstract
idea itself.

As emphasized in Alice Corp., abstract ideas are excluded from eligibility based on a concern
that monopolization of the basic tools of scientific and technological work might impede
innovation more than it would promote it. At the same time, the courts have tread carefully in
construing this exclusion because, at some level, all inventions embody, use, reflect, rest upon
or apply abstract ideas and the other exceptions. Thus, an invention is not rendered ineligible
simply because it involves an abstract concept. In fact, inventions that integrate the building
blocks of human ingenuity into something more by applying the abstract idea in a meaningful
way are eligible.

The guidelines provide examples of abstract ideas, referenced in Alice Corp.:
-Fundamental economic practices ;
-Certain methods of organizing human activities;
-An idea of itself; and
-Mathematical relationships/formulas

Claims that include abstract ideas like these should be examined under Part 2 to determine whether the abstract idea has been applied in an eligible manner.

For Part 2, examiners are to determine whether there are there other limitations in the claim that show a patent-eligible application of the abstract idea, e.g., more than a mere instruction to apply the abstract idea.  They are to consider the claim as a whole by considering all claim elements, both individually and in combination.

The guidelines provide the following non-exclusive examples of limitations referenced in Alice Corp. that may be enough to qualify as “significantly more” when recited in a claim with an abstract idea:
-Improvements to another technology or technical fields;
-Improvements to the functioning of the computer itself; and
-Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.

The guidelines provide the following non-exclusive examples of limitations referenced in Alice Corp. that are not enough to qualify as “significantly more” when recited in a claim with an abstract idea:
-Adding the words “apply it” (or an equivalent) with an abstract idea, or mere instructions to implement an abstract idea on a computer; and
-Requiring no more than a generic computer to perform generic computer functions that
are well-understood, routine and conventional activities previously known to the industry.

If there are no meaningful limitations in the claim that transform the exception into a patent
eligible application such that the claim amounts to significantly more than the exception itself, the claim should be rejected under 35 U.S.C. § 101 as being directed to non-statutory subject
matter.

Interestingly, and contrary to my prediction in the Alice summary, after conducting the two-part analysis, examiners are instructed to proceed with examination of the claim, regardless of
whether a rejection under § 101 has been made, to determine patentability in accordance with
the other requirements of 35 U.S.C. § 101 (utility and double patenting), non-statutory double
patenting, and §§ 112, 102, and 103 (indefiniteness, novelty, and obviousness).