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Patent-Eligible Subject Matter

Thomas K. SchererPartnerScherer@oshaliang.com713-228-8600March 2, 2018

Patent-Eligible Subject Matter• 35 U.S.C. §101

– Establishes categories of patent-eligible subject matter as follows:

• “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title”

Patent-Eligible Subject Matter• Judicial exceptions:

– Courts have established exceptions to patent-eligible subject matter as follows:

• Laws of Nature• Natural Phenomenon• Abstract Ideas

Test for Patent Eligibility• USPTO Guidelines for determining

patent-eligible subject matter– Step 1:

• Determine whether the claim is one of the statutory classes (process, machine, manufacture, or composition of matter)

– If not, then the claim is patent-ineligible– If so, then proceed to step 2

Test for Patent Eligibility• USPTO Guidelines for determining

patent-eligible subject matter– Step 2:

• Determine whether the claim is directed to one of the recognized judicial exceptions (Laws of Nature, Natural Phenomenon, or Abstract Ideas)

– If not, then the claim is patent-eligible– If so, then proceed to step 3

Test for Patent Eligibility• USPTO Guidelines for determining

patent-eligible subject matter– Step 3:

• Determine whether the claim recites additional elements that amount to significantly more than the judicial exception

– If not, then the claim is patent-ineligible– If so, then the claim is patent-eligible

Test for Patent Eligibility• USPTO flowchart

– From official guidelines:Evaluating Subject Matter Eligibility

Examiners are to:

1. Review the disclosure to identify what applicant considers as the invention

2. Determine if the claim falls into a statutory category.

3. Identify the judicial exception recited in the claim (if any)

4. Determine if the claim as a whole recites significantly more than the judicial exception itself.

Strategies for Replies• Examiners often:

– Use conclusory statements to satisfy step 2A• Particularly with respect to abstract ideas

– Find arguments against step 2A unpersuasive• Accordingly, it is wise to submit arguments

for both steps 2A and 2B• It is often easier to establish that the claim recites

additional elements that amount to significantly more, than to establish that the claim is not directed to a judicial exception

• Also, it is important to cite an analogous example from the USPTO Guidelines in the arguments

Case Law• Diamond v. Chakrabarty, 447 U.S. 303

(1980)– Supreme Court held

• A live, human-made micro-organism is patentable subject matter under 35 USC 101

• Respondent’s micro-organism constitutes a “manufacture” or “composition of matter” within that statute

• The Court ruled that patents could be issued for “anything under the sun that is made by man”

Case Law• Bilski v. Kappos, 561 U.S. 593 (2010)

– Federal Circuit en banc held• Departing from Chakrabarty, a clear test for

patent-eligibility was established• Claim is patent-eligible under 35 USC 101, if

– It is tied to a particular machine or apparatus, or– It transforms a particular article into a different state

or thing (i.e., machine-or-transformation test)

– Supreme Court reversed and held• Machine-or-Transformation test is not the sole

test for determining patent eligibility, instead it is merely “a useful and important clue, an investigative tool.”

Case Law• Mayo Collaborative Servs. v. Prometheus

Labs., Inc. 132 S. Ct. 1289 (2012)– Supreme Court held

• “Because methods for making such determinations were well known in the art, this step simply tells doctors to engage in well-understood, routine, conventional activity previously engaged in by scientists in the field. Such activity is normally not sufficient to transform an unpatentable law of nature into a patent-eligible application of such a law.”

Case Law• Mayo Collaborative Servs. v. Prometheus

Labs., Inc., 132 S. Ct. 1289 (2012)– Supreme Court held

• “The conclusion is that – (1) a newly discovered law of nature is itself

unpatentable and – (2) the application of that newly discovered law is also

normally unpatentable if the application merely relies upon elements already known in the art.”

• So now, obviousness is a factor in the consideration of patent eligibility

Case Law• Alice Corp v. CLS Bank Inc., 132 S. Ct.

1289 (2012)– Supreme Court held

• The “Mayo framework” should be used in all cases in which the Court had to decide whether some category of advance was inside or outside the scope of the patent system

• Post-Mayo, some uncertainty existed over whether its rationale applied only to natural principles (laws of nature) or instead applied more generally to the patent eligibility of all abstract ideas and general principles, including those involved in software patents

Case Law• Alice Corp v. CLS Bank Inc., 132 S. Ct.

1289 (2012)– Supreme Court applied the two-step test:In the first Mayo step…– the court must determine whether the patent claim under examination contains

an abstract idea, such as an algorithm, method of computation, or other general principle. If not, the claim is potentially patentable, subject to the other requirements of the patent code. If the answer is affirmative, the court must proceed to the next step.

In the second Mayo step…– the court must determine whether the patent adds to the idea “something

extra” that embodies an “inventive concept.”– If there is no addition of an inventive element to the underlying abstract idea,

the court should find the patent invalid under § 101.

Case Law• DDR Holdings, LLC v. Hotels.com, L.P.

773 F.3d 1245 (Fed. Cir. 2014). – CAFC upheld District Court’s finding of patent

eligibility (first decision based on Alice test):• DDR’s patents passed the Alice test because, even if they

claimed an abstract concept (an issue that the court did not decide), they claimed a solution that was “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”

• The court noted that DDR’s patents overrode the normal, expected manner in which the network would otherwise operate, distinguishing from patents that broadly and generically claimed “use of the Internet” to perform standard business practices.

Case Law• Enfish, LLC v. Microsoft Corp., 2015-1244,

(Fed. Cir. May 12, 2016)– CAFC overturned District Court’s finding of

patent ineligibility stating:• The plain focus of the claims is on an improvement to computer

functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.

• Accordingly, we find that the claims at issue in this appeal are not directed to an abstract idea within the meaning of Alice. Rather, they are directed to a specific improvement to the way computers operate, embodied in the self-referential table.

• We are not faced with a situation where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation. Rather, the claims are directed to a specific implementation of a solution to a problem in the software arts.

Case Law• TLI Communs. LLC v. AV Auto., L.L.C.

(Fed. Cir. May 17, 2016)– CAFC upheld District Court’s finding of patent

ineligibility:• The Court found the claims were directed to the use of

conventional or generic technology in a well-known environment without indicating that the claims solved a problem presented by combining the two.

• The patent only provided functional descriptions of the tangible components without any structure or details.

• Accordingly, the Court found that merely reciting a server and a telephone unit did not confer patent eligibility to the abstract idea, and agreed with the District Court’s determination based on the Alice test.

Case Law• Bascom Global Internet Services, Inc. v.

AT&T Mobility LLC, (Fed. Cir. June 27, 2016)– CAFC overturned District Court’s finding of

patent ineligibility:• The Court found, using the Alice test, that the specific claim

limitations were sufficient to establish patent eligibility not because the limitations themselves provided an “inventive concept,” but because the arrangement of those elements did.

• An inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces.

• The claims do not merely recite the abstract idea of filtering content along with the requirement to perform it on the Internet, or to perform it on a set of generic computer components. Such claims would not contain an inventive concept.

Case Law• Rapid Litigation Management v.

CellzDirect (Fed. Cir. July 5, 2016)– CAFC overturned District Court’s finding of

patent ineligibility:• The Court found that the patent did not concern a law of nature, but

rather “a new and useful laboratory technique” and further noted, even if the patent is directed to a law of nature, it is eligible under step two. The twice-frozen process provides an inventive concept.

• In reaching its conclusion, the Court added two points: • (1) patent-eligibility does not turn on ease of execution or obviousness

of application; and • (2) while pre-emption is not the test for determining patent-eligibility, the

District Court’s findings that the patent “does not lock up the natural law in its entirety” and that “LTC has already managed to engineer around the patent” are in accord with the conclusion that “the patent is not ‘directed to’ a patent-ineligible building block of human ingenuity.”

Case Law• McRO, Inc. dba Planet Blue v. Bandai

Namco Games America, Inc. et al. (Fed. Cir. September 13, 2016) – CAFC overturned District Court’s finding of

patent ineligibility:• When looked at as a whole, the claim is directed to a

patentable, technological improvement over the existing, manual 3-D animation techniques.

• The claim uses limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice and, therefore, is not directed to an abstract idea.

• Because the claim is not directed to ineligible subject matter, the Court did not reach Alice step two.

Patent Eligibility Trend• As can be seen from the recent case law,

there is currently a trend of finding patent eligibility (except in extraordinary cases)

• Claims that recite specific elements or arrangements that provide tangible solutions or improvements to the existing technology are being routinely found to recite patent-eligible subject matter.

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