The Search for an Abstract Idea Test Continues to Elude; Federal Circuit Goes Old School with Common Law Analysis of Precedent

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In Amdocs (Israel) Limited v, Openet Telecom, Inc., [2015-1180] the Federal Circuit reversed and remanded the district court’s judgment on the pleadings that U.S. Patent Nos. 7,631,065, 7,412,510, 6,947,984, and 6,836,797 were not directed to patent eligible subject matter under 35 USC 101.

The patents in suit concerned, inter alia, parts of a system designed to solve an accounting and billing problem faced by network service providers.  The Federal Circuit outlined the Alice/May two step framework, and noted that its cases generally follow the step one/step two Supreme Court format, reserving step two for the more comprehensive analysis in search of the inventive concept. The Federal Circuit went on to observe that recent cases suggest that there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished
without going beyond step one.

The Federal Circuit said that the analysis presumably would be based on a generally-accepted and understood definition of, or test for, what an ‘abstract idea’ encompasses.  The Federal Circuit  conceded that:

a search for a single test or definition in the decided cases concerning § 101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test.

The Federal Circuit noted that in absence of a defintion, the decisional mechanism
courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided, which the Court identified as the classic approach of common law.

After reviewing some of its precedent, the Federal Circuit found the claims in the ’065 Patent were much closer to those in BASCOM and DDR Holdings than those in Digitech, Content Extraction, and In re TLI Commc’ns. Indeed, even if we were to agree that claim 1 is directed to an ineligible abstract idea under step one, the claim is eligible
under step two because it contains a sufficient “inventive concept.”  The Federal Circuit concluded the the claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows
which previously required massive databases).

With respect to the ‘510, ‘984, and ‘797 Patents, the Federal Circuit said these claims were eligible for patenting for reasons similar to those that undergirded the eligibility of the ’065 patent claims.  With respect to the ’984 Patent.

 

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Congress Made a Rock So Heavy that the Courts Can’t Pick it Up

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In Medtronic, Inc. v. Robert BoschHealthcare Systems, Inc., [2015-1977, 2015-1986, 2015-1987] (October 20, 2016), the Court of Appeals for the Federal Circuit reaffirmed its earlier order that the PTAB’s vacatur of its institution decisions and termination of the
proceedings constitute decisions whether to institute inter partes review and are therefore “final and nonappealable” under § 314(d).

A decision whether to institute inter partes review is “final and nonappealable” under 35 U.S.C. § 314(d).  The Supreme Court confirmed this in Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016), holding that §314(d) operates to bar review in cases where the challenge consists of questions that are “closely tied” or “closely related” to “the application and interpretation of statutes related to the Patent Office’s
decision to initiate inter partes review.”

The Federal Circuit concluded that under Cuozzo a decision whether to institute inter partes review proceedings pursuant to §314(a) (the issue in Cuozzo) and a reconsideration of that decision (the current situation are both barred from review by § 314(d).  The Federal Circuit said that It is difficult to conceive of a case more “closely related” to a decision to institute proceedings than a reconsideration of that very decision. adding that “[i]t would be strange to hold that a decision to institute review would not be reviewable but a reconsideration of that decision would be reviewable.”

While Medtronic correctly pointed out that Cuozzo reserved the question of §314(d)’s effect on “appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond ‘this section.’” The Federal Circuit did not agree that these issues applied here.

Although the result seemed preordained by Cuozzo, one can relate to Medtronic’s incredulity that Congress can give decision making authority to a government agency, and then completely insulate that agency’s exercise of that authority from review by courts,

 

Substantial Evidence Supports Determination of Reasonable Expectation of Success

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In In re Efthymiopoulos, [2016-1003] (October 18, 2016) the Federal Circuit affirmed the PTAB decision that the claimed invention relating to the administration or an anti-influeza drug “by inhalation through the mouth alone” was obvious.

There is no dispute that Von Itzstein I discloses the use of zanamivir to treat and prevent influenza. There is also no dispute that Von Itzstein II discloses several pages of different administration methods for an adjacent homologue of zanamivir to achieve the same result—treating or preventing influenza, expressly discloses administration
through “oral,” “nasal,” or other forms “suitable for administration
by inhalation,” among other methodologies.

Efthymiopoulos’s argument that a skilled artisan would not reasonably expect zanamivir to be effective if administered through oral inhalation is also unpersuasive.  The Federal Circuit found that substantial evidence supports the determination that a skilled artisan would have a reasonable expectation of success in combining the Von Itzstein references.   Efthymiopoulos further argued that the Board disregarded its evidence of unexpected results, namely the testimony of Dr. Hayden. However the Federal Circuit found that the record showed that the Board thoroughly considered and discussed
Dr. Hayden’s declaration in its decision and found that Dr. Hayden’s testimony insufficient to overcome the prima facie case of obviousness.

 

 

Claims for a New Abstract Idea are Still Claims to an Abstract Idea, Invalid under §101

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In Synopsis, Inc. v. Mentor Graphics Corporation, [2015-1599] (October 17, 2016), the Federal Circuit affirmed summary judgment that claims of U.S. Patent Nos. 5,530,841; 5,680,318; and 5,748,488 were invalid under 35 U.S.C. §101.  The Federal Circuit rejected the argument that the claims were directed to eligible subject matter because they relate to complex algorithms used in computer- based synthesis of logic circuits, instead finding that the are directed to the abstract idea of translating a functional
description of a logic circuit into a hardware component description of the logic circuit.

The Federal Circuit said that the idea of reviewing a description of certain functions and turning it into a representation of the logic component that performs those functions can be—and, indeed, was—performed mentally or by pencil and paper by one of ordinary skill in the art.  Furthermore the Federal Circuit said that the claims did not call for the involvement of a computer, and thus they cannot be characterized as an improvement in a computer as a tool.

At Step I of the Alice test, the Federal Circuit said that it continues to treat analyzing
information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category.  The justification for this is that computational methods which can be performed entirely in the human mind are the types of methods that embody the “basic tools of scientific and technological work” that are free to all men and reserved exclusively to none.

Synopsis argued that the complexity of the claims indicated that the method could not be performed mentally, but the Federal Circuit said that claims covered methods that could be performed mentally.  While Synopsys may be correct that the inventions were intended to be used in conjunction with computer-based design tools, the claims were not confined to that conception, and the §101 inquiry must focus on the language of the claims themselves.

At Step II of the Alice test, the Federal Circuit rejected the argument that the novelty of the claims saved them from being abstract, noting that a claim for a new abstract idea is
still an abstract idea, and concluded that the search for a § 101 inventive concept is distinct from demonstrating § 102 novelty.   Although conceding that the contours of what constitutes an inventive concept are far from precise, the Federal Circuit said that the claims contain no technical solution. To the extent the claims add anything to the abstract idea (of translating a functional description of a logic circuit into a hardware component description of the logic circuit), it is the use of assignment
conditions as an intermediate step in the translation process.  But, because the claims are for a mental process, assignment conditions, which merely aid in mental translation as opposed to computer efficacy, are not an inventive concept that takes the claims
beyond their abstract idea.

 

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Disavowal By Description, Disparagement, and Argument Limit Claims

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In Poly America, LP v. API Industries, Inc., [2016-1200] (October 14, 2016), the Federal Circuit  affirmed the district court’s construction of “short seal” in the claims of U.S. Patent No. 8,702,308 to require that such seals extend inwardly, because of clear and unequivocal statements that the inventor intended to limit the claimed invention.

Poly-America argues that in construing the term “short seal” to require inward extension, the district court erred by importing limitations from embodiments described in the specification, misreading the prosecution history, and ignoring principles of claim differentiation.  The Federal Circuit disagreed.

Claim construction departs from the plain and ordinary meaning in only two instances: (1) when a patentee acts as his own lexicographer; and (2) when the patentee disavows the full scope of the claim term in the specification or during prosecution.  There was no indication or assertion of lexicography in this case, so the only question remaining was whether the inventor disavowed trash bags with short seals that do not extend inwardly.  The Federal Circuit noted that disavowal can be effectuated by language in the specification or the prosecution history, but in either case, the standard for disavowal is exacting, requiring clear and unequivocal evidence that the claimed invention includes or does not include a particular feature.  However, while disavowal must be clear and unequivocal, it need not be explicit.

The Federal Circuit noted the short seal was described as “one of the characteristics of the present invention,” and that the specification disparaged prior art without the claimed feature. Furthermore, the Federal Circuit found that Poly-America’s reply to the rejection of all claims also contains a clear and unmistakable disavowal of short seals that do not extend inwardly.

The Federal Circuit said that this analysis did not involve importing limitations from embodiments described in the specification, noting that every embodiment described in the specification has inwardly extended short seals and every section of the specification indicates the importance of inwardly extended short seals.

 

No Disclaimer Found When Statements are Viewed in Context of Claims Pending at the Time They were Made

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In Massachusetts Institute of Technology v. Shire Pharmaceuticals, Inc., [2015-1881] (October 13, 2016), the Federal Circuit affirmed the district court’s construction of “vascularized organ tissue” and “cells derived from a vascularized tissue” and its determination that the term “three-dimensional scaffold” was not indefinite, and thus the parties stipulated to a final judgment of validity and infringement stands.

The Federal Circuit said that the doctrine of prosecution disclaimer precludes patentees from recapturing through claim interpretation specific meanings disclaimed during prosecution. In order for prosecution disclaimer to attach, the disavowal must be both clear and unmistakable.  Where the alleged disavowal is ambiguous, or even amenable to multiple reasonable interpretations, the Federal Circuit said that it has declined to find prosecution disclaimer.

On the first term, “vascularized organ tissue,” the district court determined that there was no clear and unmistakable disclaimer that would exclude skin from the term’s ordinary meaning, and construed the term “vascularized organ tissue” as “vascularized tissue from an organ,” reasoning that because “the dermal layer of skin contains blood vessels, this term encompasses skin,” and the Federal Circuit agreed. The Federal Circuit analyzed the statements identified by Shire in the context of the claims pending at the time they were made.  Federal Circuit determined that a skilled artisan, reading the prosecution history as a whole, would conclude that MIT’s invention does in fact cover vascularized skin.

The Federal Circuit also agreed with the district court’s construction of “cells derived from a vascularized tissue” to include both parenchymal and non-parenchymal cells, noting that the claims themselves do not make a distinction.  After reading the full prosecution history in light of the then-pending claim language, the Federal Circuit concluded that a skilled artisan would not read MIT’s statements made during prosecution — and directed to very different claim language — as limiting the term “cells derived from a vascularized tissue” to parenchymal cells.

Lastly with respect to the district court’s determination that the term “three-dimensional scaffold” is not indefinite, the Federal Circuit affirmed the district court’s claim construction and validity determination.  While Shire asserted that there was no definition of “three-dimensional,” the district court construed the term “three dimensional” according to its accepted, ordinary meaning, as confirmed by dictionary definitions. Shire complained that these were current, non-technical dictionaries, but the Federal Circuit pointed out that Shire failed to show how technical dictionaries or dictionaries contemporaneous to the patents’ filing date would define the term any differently, and in fact the definitions were consistent with Shires own experts.

 

 

System and Method Claims Directed to Abstract Idea Properly Bounced on 12(b)(6) Motion

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In Fairwarning IP, LLC v. Iatric Systems, Inc., [2015-1985] (October 11, 2016), the Federal Circuit affirmed the district court’s dismissal of the complaint because U.S. Patent No. 8,578,500, claimed patent-ineligible subject matter under 35 U.S.C. § 101.

The patent related to ways to detect fraud and misuse by identifying unusual patterns in users’ access of sensitive data.   At step I of the Supreme Court’s two step framework for determining patent eligibility, the Federal Circuit found that the patent was directed to the abstract idea of analyzing records of human activity to detect suspicious behavior.  The Federal Circuit noted that the “realm of abstract ideas” includes “collecting information, including when limited to particular content.”  Furthermore, analyzing
information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category.  Finally, “merely presenting the results of abstract processes of collecting and analyzing
information, without more (such as identifying a particular tool for presentation), is abstract as an ancillary part of such collection and analysis.”

The Federal Circuit distinguished McRO where it was the incorporation of the claimed rules, not the use of the computer, that improved the existing technological process.  In contract, the Federal Circuit found the claims in suit to be more like those in Alice, merely implement an old practice in a new environment.  The “rules” in the patents in suit pose the same questions that humans in analogous situations
detecting fraud have asked for decades, if not centuries.  The Federal Circuit also distinguished Enfish where the claimed invention was “directed to a specific improvement to the way computers operate.”

Because it found the claims were directed to an abstract idea at step one of the patent-eligibility inquiry, the Federal Circuit proceeded to step two.  After scrutinizing the claim elements more microscopically under step two, ithe Federal Circuit found nothing sufficient to transform the nature of the claim into a patent eligible application.  The claim limitations, analyzed alone and in combination, fail to add “something more” to “transform” the claimed abstract idea of collecting and analyzing information to
detect misuse into “a patent-eligible application.”

The Federal Circuit also found the system claim patent ineligible, noting that while it is not always true that related system claims are patent-ineligible because similar method
claims are, when they exist in the same patent and are shown to contain insignificant meaningful limitations, the conclusion of ineligibility is inescapable.

FairWarning tried to save the claims, arguing that they solved the problem of compiling and combining disparate information sources, but the Federal Circuit that these features were not in the claims.  The Federal Circuit concluded:

After closely examining the claims of the ’500 patent in search of “something more” to transform the  underlying

abstract idea into a patent-eligible application, we conclude that there is nothing claimed in the patent—either by considering the claim limitations individually or as an ordered combination—that makes its claims patent eligible.

FairWarning complained that the district court’s reliance on the finding that “the human mind can perform each step” was improper.  The Federal Circuit dodged the issue, commenting that “the inability for the human mind to perform each claim step
does not alone confer patentability.”  Likewise the Federal Circuit rejected FairWarning’s argument about preemption, noting that while preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.

 

 

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Internal Fight Over Role of Appellate Court Reveals Substantial Difference of Opinion over Substantial Evidence at Federal Circuit

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In Apple, Inc., v. Samsung Electronics Co., Inc., [2015-1171, 2015-1195, 2015-1994] (October 7, 2016), the en banc Federal Circuit completely undid the panel decision with respect to three patents, with the three original panel judges dissenting.

The district court granted summary judgment that Samsung infringed U.S. Patent No. 8,074,172, and jury found that the claims were not invalid.  The jury found that Samsung infringed U.S. Patent No. 5,946,647 and U.S. Patent No. 8,046,721, and that these patents were not invalid.  The district court denied Samsung’s motions for JMOL.  A panel of the Federal Circuit reversed.  On Apple’s petition for en banc review, the Federal Circuit granted the petition “to affirm our understanding of the appellate function as limited to deciding the issues raised on appeal by the parties, deciding these issues only on the basis of the record made below, and as requiring appropriate deference be applied to the review of fact findings.”

The ’647 Patent

The jury found that Samsung infringed the ‘647 patent and awarded Apple $98,690,625. Because there was substantial evidence to support the jury’s verdict, the en banc Federal Circuit affirmed.  The Court found that the panel used extra-record extrinsic evidence to modify the agreed upon and unappealed construction.  The Court pointed out that the claim construction was not appealed, and it did not agree with the Panel that that Apple agreed to the panel’s change to the construction.  Samsung did not appeal the validity of the ‘647 patent

The ’721 Patent

The jury found that the ‘721 patent was infringed and would not have been obvious. Because there was substantial evidence to support the jury’s underlying fact findings, and that these fact findings supported the conclusion that Samsung failed to establish by clear and convincing evidence that the claims of the ‘721 patent would have been obvious.  The Court noted its restricted role on appeal:

Our job is not to review whether Samsung’s losing position was also supported by substantial evidence or to weigh the relative strength of Samsung’s evidence against Apple’s evidence. We are limited to determining whether there was substantial evidence for the jury’s findings, on the entirety of the record.

The ‘172 Patent

The district court granted summary judgment of infringement of the ‘172 patent, and the jury found the patent not invalid, and awarded $17,943,750 in damages.  Samsung appealed the denial of its JMOL.  The Federal Circuit found substantial evidence supporting the jury verdict, and affirmed.  The Court further commented on its role as an appellate court:

Even in cases in which a court concludes that a reasonable jury could have found some facts differently, the verdict must be sustained if it is supported by substantial evidence on the record that was before the jury. But as an appellate court, it is beyond our role to reweigh the evidence or consider what the record might have supported, or investigate potential arguments that were not meaningfully raised.  Our review is limited to whether fact findings made and challenged on appeal are supported by substantial evidence in the record, and if so, whether those fact findings support the legal conclusion of obviousness.

The Federal Circuit affirmed and reinstated the district court judgment as
to the ’647, ’721, and ’172 patents, and well as the portions of the panel decision pertaining to four other patents.

 

 

Anything You Say Can and Will be Used Against You in a Court of Law

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Consistent with the Miranda warning that anything you say can (and will) be used against you in a court of law.  The Federal Circuit looks to every part of a patent when construing the claims, including the lowly abstract.  In Hill-Rom Co. v. Kinetic Concepts, Inc., 209 F.3d 1337, 1341 (Fed. Cir. 2000) the Federal Circuit used the Abstract to support its claim construction.  The Federal Circuit rejected the argument that 37 CFR 1.72(b) provides that the abstract “shall not be sued for interpreting the scope of the claims,” pointing out that this was a Patent Office rule, governing the conduct of patent examiners examining patent applications, and not construction of claims by the courts.  The Hill-Rom court noted other instances where it used the Abstract to construe claims: United States Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1560, 41 USPQ2d 1225, 1230 (Fed.Cir. 1997)(citing the description in the Abstract); Stryker Corp. v. Intermedics Orthopedics, Inc., 96 F.3d 1409, 1412, 40 USPQ2d 1065, 1066 (Fed.Cir. 1996)(citing the description in the Abstract); Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1269, 229 USPQ 805, 810 (Fed.Cir. 1986)(citing the description in the Abstract), and found no legal principle that would require it “to disregard that potentially helpful source of intrinsic evidence as to the meaning of claims.”  The Federal Circuit also looked to the Abstract in Honeywell Inc. v. Victor Co. of Japan Ltd., 298 F3d 1317, 63 USPQ2d 1904 (Fed. Cir. 2002).

However, in Innova’Pure Water, Inc., v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1121 [72 USPQ2d 1001, 1008] (Fed. Cir. 2004), the Federal Circuit discounted statements made in an Abstract, noting “While a statement in the Abstract may operate as a clear expression of manifest exclusion, for several reasons, this statement does not.”

 

What’s in a Name?

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Does the title have a role in claim construction?  In Poly-America LP v. GSE Lining Technology Inc., 383 F3d 1303, [72 USPQ2d 1685, 1689] (Fed. Cir. 2004), the Federal Circuit found that the title of the patent in suit (5,763,047) — Blown-film Textured Liner Having a Smooth Welding Strip — supported treating the term blown-film in the preamble of the claims as a claim limitation.

But, see, Moore U.S.A., Inc. v. Standard Register Co., 229 F.3d 1091, 1111 [56 USPQ2d 1225] (Fed. Cir. 2000) (“[T]he bar on importing limitations from the written description into the claims applies no less forcefully to a title.”); Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1312 [51 USPQ2d 1161] (Fed. Cir. 1999) (noting patent title’s“near irrelevancy” in claim construction).