In Beteiro, LLC v. Draftkings, Inc., [2022-2275, 2022-2277, 2022-2278, 2022-2279, 2022-2281, 2022-2283] (Fed. Cir. 2024), the Federal Circuit affirmed the dismissal of a suit for infringement of U.S. Patent Nos. 9,965,920, 10,043,341, 10,147,266, and 10,255,755 for failure to state a claim based on the subject matter ineligibility of the patent claims.

All of the patents share a common specification and title: “Apparatus and Method for Facilitating Gaming Activity and/or Gambling Activity.” The patents disclose a purported invention which “facilitate[s] gaming activity and/or gambling activity at a gaming venue remote from the user’s or individual’s physical location” such that the user can “participate in live gaming activity and/or gambling activity via a user communication device” even if the user is not in the same location as the gaming venue.

At step one of the Alice/Mayo test, the Federal Circuit agreed with the district court that Beteiro’s claims are directed to the abstract idea of “exchanging information concerning a bet and allowing or disallowing the bet based on where the user is located.”

The Federal Circuit said that the claims exhibit several features that are well-settled indicators of abstractness:

• First, the claims broadly recite generic steps of a kind frequently held to be abstract (detecting information, generating and transmitting a notification based on the information, receiving a message (bet request), determining (whether the bet is allowed based on location data), and processing information (allowing or disallowing the bet).
• Second, the claims are drafted using largely (if not entirely) result-focused functional language, containing no specificity about how the purported invention achieves those results.
• Third, there are several precedents where broadly analogous claims, such as those involving methods of providing particularized information to individuals based on their locations, to be abstract.
• Fourth, the district court was able to persuasively analogize Beteiro’s patent claims to longstanding “real-world” (“brick and mortar”) activities.

At step two, the district court found that the representative claim failed to provide an inventive concept because it achieved the abstract steps “using several generic
computers – namely, a ‘computer,’ a ‘communication link,’ a ‘first communication device,’ a ‘second communication device,’ and a ‘global positioning device.’” The district court thus concluded that the claim that simply describes a conventional business practice executed by generic computer components cannot survive Step 2. The Federal Circuit agreed.

In Hawk Technology Systems, LLC v. Castle Retail, LLC, [2022-1222] (February 17, 2022), the Federal Circuit affirmed the dismissal of the suit because the asserted patent claims of U.S. Patent No. 10,499,091 on a method of viewing multiple simultaneously displayed and
stored video images on a remote viewing device of a video surveillance system were directed to ineligible subject matter and therefore invalid under 35 U.S.C. § 101.

The district court concluded that the ’091 patent claims were directed to the abstract idea of “storing and displaying video,” and the Federal Circuit agreed, noting that the claims are similar to those it has found to be directed to abstract ideas. The Court noted that in Adaptive Streaming Inc. v. Netflix, Inc., 836 F. App’x 900, 903 (Fed. Cir. 2020), it held that “encoding and decoding image data and . . . converting formats, including when data is received from one medium and sent along through another, are by themselves abstract
ideas.”

While Hawk characterized its invention as a solution to a technical problem in multi-format digital video product systems, the Federal Circuit pointed out that even a specification full of technical details about a physical invention may nonetheless conclude with claims that claim
nothing more than the broad law or abstract idea underlying the claims. The claims fail to recite a specific solution to make the alleged improvement— conserving bandwidth while preserving quality—“concrete” and at most recite abstract data manipulation.

At Alice step two, the Federal Circuit said that the district court found that the claims, “read in light of the specification, do not show a technological improvement in video storage and display because the limitations can be implemented using generic computer elements,” and that the “specification and claims do not explain or show how the monitoring and storage is improved, except by using already existing computer and camera technology,” and thus the claims failed at Alice step two. The Federal Circuit agreed.

Again, Hawk argued that the claims recite an inventive solution, but the Federal Circuit said that even if the claims achieved the purported solution, they only use generic functional language to do so and require nothing other than conventional computer and network components operating according to their ordinary functions. The Federal Circuit said that it recognize that the claims include “parameters,” but the claims fail to specify precisely what the parameters are and the parameters at most concern abstract data manipulation image formatting and compression.

The Federal Circuit therefore found that the ’091 patent claims fail to transform the abstract idea into something more and thus fail Alice step two. The Court that held that the ’091 patent is patent ineligible because its claims are directed to an abstract idea and fail to
transform that abstract idea into patent-eligible subject matter.

In Chromadex, Inc. v. Elysium Health, Inc., [2022-1116] (February 13, 2023), the Federal Circuit affirmed the grant of summary judgment that the asserted claims of U.S. Patent No. 8,197,807 on dietary supplements containing isolated nicotinamide riboside are directed to unpatentable subject matter.

The district court construed several claim terms including “isolated nicotinamide riboside” to mean “nicotinamide riboside that is separated or substantially free from at least some other components associated with the source of nicotinamide riboside.” The district court concluded that the claims were directed to a natural phenomenon, namely, “compositions
comprising isolated nicotinamide riboside, a naturally occurring vitamin present in cow milk.”

The only difference between at least one embodiment within the scope of the claim and natural milk is that the NR in the former is isolated. The asserted claims do not have characteristics markedly different from milk. Both the claimed compositions and milk “increase NAD+ biosynthesis upon oral administration.

The Federal Circuit noted that the claims cover several different composition embodiments, some of which are structurally different from milk. However, the claims also encompass—as both parties agree—at least one embodiment that covers milk, except that the NR element is “isolated.” Because the claims are broad enough to encompass a product of nature, it is invalid under § 101.

Chromadex argud that the claims, in fact, possess markedly different characteristics that render them patent-eligible. Chromadex bases this argument on two main points: (1) “NR is found in milk in only trace amounts,” i.e., one part per million; and (2) “what little NR is found in milk is not bioavailable” because it is bound to the lactalbumin whey protein. However, the Federal Circuit found this argument unpersuasive first because the claims do not require that the NR, specifically, increase NAD+, and milk increases NAD+ biosynthesis (albeit because it contains tryptophan rather than because of the trace amounts of NR), but that is the only therapeutic effect that the claims require. Second, the claims simply do not reflect the distinctions Chromadex relied upon: they do not require any specific quantity of isolated NR, and the district court’s construction for “isolated [NR],” which Appellants do not challenge on appeal, does not require that the NR be separated from the lactalbumin whey protein but only from “some of the other components associated with the source of [NR].”

The Federal Circuit said that the act of isolating the NR by itself, no matter how difficult or brilliant it may have been (although the specification makes clear that it was conventional), similarly does not turn an otherwise patent-ineligible product of nature into a patentable invention.

In a recent IP Watchdog panel discussion incluing Harness Dickey’s new CEO Ray Millien, Faegre Drinker’s Robert Stoll, Schwegman Lundberg & Woessner’s Russ Slifer, and AddyHart’s Benjamin Cappel, Ray Millien posited that the only obstacle to autonomous cars is software, but given the present state of §101 jurisprudence, “once someone solves that problem, it’s an abstract idea.“

Consider what technologies §101 is holding back, and imagine what technologies §101 will hold back if this problem is not corrected. Patent lawyers of the future might one day read something like this:

In In re Erickson,* (Fed. Cir. 2124), the Federal Circuit issued a Rule 36 affirmance of the decision of the PTAB affirming the Examiner’s rejection of all of the pending claims of Emory Erickson’s application 31/239484 entitled “Teleportation System and Methods.”  The PTAB opinion explained that the claimed invention, which Mr. Erickson calls a “Transporter,” is directed to a teleportation apparatus and a method for “nearly instantaneously” moving an object from one location to another.  Mr. Erickson apparently provided a practical demonstration of his invention during a recent outage of the USPTO’s EFS system, delivering his Applicant’s Brief on Appeal to the USPTO via his “Transporter,” together with the $50,000 fee (37 CFR 1.17(zz)) for non-electronic filings.

Transporting Goods is an Abstract Idea

The Board began its analysis with the familiar two-step test from the classic Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014), which requires at step one a determination whether the claims are directed to an abstract idea, and if so, at step two to a determination whether the claim is directed to “something more.”  The Board noted that the Examiner found that the claims were directed to the abstract idea of “transporting goods,” and the Board agreed, citing GT Nexus, Inc. v. Inttra, Inc., 2015 WL 6747142 (N.D.Cal. 2015)(“the shipping of goods is a conventional business practice ‘long prevalent in our system of commerce.’”)

Operation in the Real World Does not Make Idea Less Abstract

While Erickson argued that the Transporter would “result in life altering consequences,” the Board said that while laudable, it does not render the system or method any less abstract, citing University of Florida Research Foundation, Inc. v. General Electric Company, 916 F.3d 1363 (Fed. Cir. 2019). The Board considered the case to be similar to Smart Systems Innovations, LLC v. Chicago Transit Authority, 873 F.3d 1364, 124 U.S.P.Q.2d 1441 (Fed. Cir. 2017), where the patent owner’s arguments that the invention operated “in the tangible world” and satisfied “a public demand for more convenient travel that did not exist in the prior art” did not save the claims from being directed to an abstract idea.

Novelty of Components Does Not Make Idea Less Abstract

The Board also rejected the arguments that the Transporter, and in particular its Heisenberg compensator, had never before existed, citing Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir. 2014)(“We do not agree with Ultramercial that the addition of merely novel or non-routine components to the claimed idea necessarily turns an abstraction into something concrete. In any event, any novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis.”). “It is well-settled that mere recitation of concrete, tangible components is insufficient to confer patent eligibility to an otherwise abstract idea.” TLI Communications LLC v. AV Automotive, L.L.C., 823 F.3d 607, 118 U.S.P.Q.2d 1744 (Fed. Cir. 2016).

Lack of Preemtion Does not Make Idea Less Abstract

The Board also dismissed Erickson’s argument that the claimed invention did not preempt all methods of transporting goods, citing buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed.Cir.2014) (collecting cases). A narrow claim directed to an abstract idea, however, is not necessarily patent-eligible, for “[w]hile preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015).

The Groundbreaking, Innovative, and Brilliant Can Still Be Abstract

While the Board found Erickson’s practical demonstrations of teleportation were “impressive,” but said that even accepting that the techniques claimed are “[g]roundbreaking, innovative, or even brilliant,” that is not enough for eligibility. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591, 133 S.Ct. 2107, 186 L.Ed.2d 124 (2013); accord buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1352 (Fed. Cir. 2014). Nor was it enough for subject-matter eligibility that claimed techniques be novel and nonobvious in light of prior art, passing muster under 35 U.S.C. §§ 102 and 103. See Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 89–90, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012); Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1151 (Fed. Cir. 2016) (“[A] claim for a new abstract idea is still an abstract idea. The search for a § 101 inventive concept is thus distinct from demonstrating § 102 novelty.”); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1315 (Fed. Cir. 2016) (same for obviousness).

The Board concluded that no matter how much of an advance in the field the claims recite, the advance lies entirely in the realm of abstract ideas, with no plausibly alleged innovation in the non-abstract application realm. An advance of that nature is ineligible for patenting.
SAP America, Inc. v. Investpic, LLC, 890 F.3d 1016, 126 U.S.P.Q.2d 1638 (Fed. Cir. 2018).

At Alice Step II, the Board found that most of the components were conventional off-the-shelf electronic and computer componets, adn thust there was no “something more” to save the claims.

* In the Star Trek universe, the transporter was invented in the early 22nd century by Dr. Emory Erickson, who also became the first human to be successfully transported.

Given Ray Millien’s prediction that the solution to autonomous vehicles may turn out to be an unpatentable abtract idea, we should all be concerned about what technologies may be overlooked or at least dealyed because the current application of §101 is interfereing with the incentives the patent system is supposed to provide to encourage their development and disclosure. While the transporter example above may be too far fetched, as Millien points out the threat to the progress of science and the useful arts is not.

In Universal Secure Registry LLC v. Apple, Inc., [2020-2044] (August 26, 2021), the Federal Circuit affirmed the dismissal under Rule 12(b)(6) that U.S. Patent Nos. 8,856,539; 8,577,813; 9,100,826; and 9,530,137 asserted by Universal Secure Registry because the four asserted patents were ineligible under 35 U.S.C. § 101.

Although the patents are otherwise unrelated, they are directed to similar technology—securing electronic payment transactions.  The district found the patents ineligible under both prongs of the Alice test, explaining that the claimed invention was directed to the abstract idea of “the secure verification of a person’s identity” and that the patents do not disclose an inventive concept—including an improvement in computer functionality— that transforms the abstract idea into a patent-eligible application.

The Federal Circuit began by noting that in cases involving authentication technology, patent eligibility often turns on whether the claims provide sufficient specificity to constitute an improvement to computer functionality itself.  Analyzing the claims of the four patents separately, the Federal Circuit determined that they were directed to abstract ideas, and did not include anything more to remove the claims from the realm of abstract ideas.

In Personaweb Technologies LLC v. Google LLC, [2020-1543, 2020-1553, 2020-1554] (August 12, 2021), the Federal Circuit affirmed the district court’s judgment on the pleadings that various
claims of U.S. Patent Nos. 7,802,310, 6,415,280, and 7,949,662 were ineligible for patenting, and therefore invalid, under 35 U.S.C. § 101. The patents relate to data-processing systems that assign each data item a substantially unique name that depends on the item’s content—a content-based identifier.

The Federal Circuit began its review at Step 1 of the Alice inquiry, deciding whether the claim is directed to a patent-ineligible concept. The Court evaluated the focus of the claimed advance over the prior art’ to determine if the claim’s “character as a whole” is directed to excluded
subject matter. The Federal Circuit agreed with the district court that the patents are directed to a three-step process: (1) using a content-based identifier generated from a hash or message digest function, (2) comparing that content-based identifier against another content-based identifier or a request for data; and (3) providing access to, denying access to, or deleting data. The Federal Circuit concluded that the claims are directed to the use of an algorithm-generated contentbased identifier to perform the claimed data-management functions (including controlling access to data items (the ’310 patent), retrieving and delivering copies of data items (the ’280 patent), and marking copies of data items for deletion (the ’662 patent).

The Federal Circuit said that these functions are mental processes that “can be performed
in the human mind” or “using a pencil and paper” — a telltale sign of abstraction. The fact that the process are performed in a computer environment didn’t transfigure the idea out of the
realm of abstraction.

The Federal Circuit recognized that the step-one inquiry looks to the claims character
as a whole rather than evaluating each claim limitation in a vacuum, but said the claims are clearly focused on the combination of those abstract-idea processes, and stringing together the claimed steps by adding one abstract idea to another amounts merely to an abstract
idea. The Federal Circuit concluded that “[t]he claims as a whole, then, are directed to a medley of mental processes that, taken together, amount only to a multistep mental process.” Ultimately, the focus of the claims is not on an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools.” In other words, the claims focus on mere automation of manual processes using generic computers.

At Step Two the Federal Circuit undertook a search for an inventive concept—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself. Personalweb argued that the claims contain an inventive concept because they “recite an application that makes inventive use of cryptographic hashes—a use that was neither conventional nor routine prior to the patents.” However, the Federal Circuit said this was not something “more,” let alone anything “significantly more,” than the abstract idea itself. Ultimately, the Federal Circuit said “The district court had it right: there is ‘nothing “inventive” about any claim details, individually or in combination, that are not themselves abstract ideas.’”

The Federal Circuit affirmed the judgment of invalidity