In Recognicorp, LLC v. Nintendo Co., Ltd., [2016-1499](April 28, 2017), the Federal Circuit affirmed the district court’s grant of judgment on the pleadings that U.S. Patent No. 8,005,303 on a method and apparatus
for building a composite facial image using constituent parts was directed to the abstract idea of encoding and decoding image data.

At Alice step one, the district court concluded that the asserted claims are “directed to the abstract idea of encoding and decoding composite facial images using a mathematical formula.”  At Alice step two, the district court found that the ’303 patent contains no inventive concept, stating that “the entirety of the ’303 Patent consists of the encoding algorithm itself or purely conventional or obvious pre-solution activity and post-solution activity insufficient to transform the unpatentable abstract idea into a patent-eligible application.”

The Federal Circuit agreed that claim 1 is directed to the abstract idea of
encoding and decoding image data, noting that it claims a method
whereby a user displays images on a first display, assigns image codes to the images through an interface using a mathematical formula, and then reproduces the image based on the codes.  The Federal Circuit rejected the argument that, like the claims in Enfish, the claim was being parsed at too high a level of abtractions.  The Federal Circuit found Digitech Image Technologies more analogous.

At step two of the Alice inquiry, the Federal Circuit found that nothing
“transforms” the abstract idea of encoding and decoding into patent-eligible subject matter.  The Federal Circuit said that claims that are directed to a nonabstract idea are not rendered abstract simply because they use a mathematical formula, but that the converse is also true: A claim directed to an abstract idea does not automatically become eligible merely by adding a mathematical formula.

The Federal Circuit concluded that the claims of the ’303 patent are directed to encoding and decoding image data, an abstract idea, adding that the claims provide no inventive concept to render them eligible under
§ 101.

In Thales Visionix, Inc., v. U.S., [2015-5150](March 8, 2017), the Federal Circuit reversed the Court of Claims determination that the claims of U.S. Patent No. 6,474,159 were directed to patent ineligible subject matter.

The Federal Circuit observed that the Supreme court “has not established a definitive rule to determine what constitutes an ‘abstract idea.'”  Because all inventions at some level embody, use. reflect rest upon or apply laws of nature, natural phenomenon, or abstract ideas, the Federal Circuit said it was important to articulate what the claims are directed to with sufficient specificity to ensure that the step one inquiry is meaningful.  The Federal Circuit looked to Rapid Litigation Management, Enfish, and Diamond v. Diehr, and concluded that for purposes of evaluating patent eligibility, the claims in the ‘159 patent were nearly indistinguishable from the claims at issue in Diehr, explaining that just as the claims in Diehr reduced the likelihood that the rubber molding process would result in over curing or under curing, the claims at issue result in a system that reduces errors in an inertial system that tracks an object on a moving platform.

The Federal Circuit also (and less aptly) analogized to Rapid Litigation, stating that just as claims directed to a new and useful technique for defining a database that runs on general-purpose computer computer equipment are patent eligible, so too are claims directed to a new an useful technique for using sensors to more efficiently track an object on a moving platform.  Editorial comment: the similarity of these two cases is hard to see.

In a line that is sure to be quoted by applicants (and patent owners), the Federal Circuit said:

That a mathematical equation is required to complete the claimed method and system does not doom the claims to abstraction.

The Federal Circuit explained that far from claiming the equations themselves, the claims seek to protect only the application of physics to the unconventional configuration of sensors as disclosed, and concluded that the claims pass Step 1 of the Alice test.

In Apple, Inc., v. Ameranth, Inc., [2015-1703, 2015-1704] (November 29, 2016), the Federal Circuit affirmed in part and reversed in part the PTAB’s subject matter eligibility determination of claims of U.S. Patent Nos. 6,384,850, 6,871,325, and 6,982,733 in three separate CBM proceedings. The patent specifications disclose a first menu that has categories and items, and software that can generate a second menu from that first menu by allowing categories and items to be selected. The patents describe a preferred embodiment of the invention for use in the restaurant industry.

The Patent Trial and Appeal Board (“Board”) construed the claims, found that each patent met the statutory definition of “covered business method patent,” and instituted CBM reviews. In its final decisions, the Board found certain claims in each of the patents unpatentable under 35 U.S.C. § 101.

On appeal the patent owner did not contest that the claims were directed to a “financial product or service,” but it did argue that the patents fall within the exception for technological inventions. 37 C.F.R. § 42.301(b) provides:

In determining whether a patent is for a technological invention solely for purposes of the Transitional Program for Covered Business Methods (section 42.301(a)), the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

The Federal Circuit observed that this regulation offers little towards understanding the meaning of the term “technological invention,” but noted that determining whether these patents are a technological invention does not require this court to determine “the full sweep of the term.” The Federal Circuit affirmed the Board’s determinations that the patents were not for technological inventions.

In the first step of the Alice test, the Board determined that the claims in all three patents are directed to the abstract idea of “generating a second menu from a first menu and sending the second menu to another location.” The patent owner complained that the characterization of the abstract idea changed from the institution decision to the final written decision. The Federal Circuit noted that an abstract idea can generally be described at different levels of abstraction, but concluded that the Board’s slight revision of its abstract idea analysis does not impact the patentability analysis. The Federal Circuit affirmed the Board’s conclusion that the claims in these patents are directed to an abstract idea.

In the second step of the Alice test, the Board found that the recited central processing unit, data storage device, and operating system components were “typical” hardware elements. The Board rejected the various elements identified by the patent owner as insignificant post-solution activity, and the Federal Circuit agreed. The Federal Circuit pointed out that the specifications describe the hardware elements of the invention as “typical” and the software programming needed as “commonly known.” Lastly the Federal Circuit rejected the patent owner’s argument that the required programming was difficult, and this difficulty indicated that the claims were not directed to an abstract idea. The difficulty of the programming details for this functionality is immaterial because these details are not recited in the actual claims. The degree of difficulty in implementing an abstract idea in this circumstance does not itself render an abstract idea patentable.

The Federal Circuit went on to reverse the confirmation of patentability of several of the claims.

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.

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.

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.

In Intellectual Ventures v. Symantec, [2015-1769, 2015-1770, 2015-1771](September 30, 2016), the Federal Circuit affirmed summary judgment, that the asserted claims of the ‘050 and ‘142 patents were directed to ineligible subject matter, and reversed the finding that the asserted claim of the ‘610 patent covered eligible subject matter.

At Step I of the Alice/Mayo Test for the ‘050, the Federal Circuit agreed that the ‘050 patent was directed to the abstract idea of filtering emails, noting that it it was long-prevalent practice for people receiving paper mail to look at an envelope and discard certain letters, without opening them, from sources from which they did not wish to receive mail based on characteristics of the mail.  At Step II of the Alice/Mayo Test the Federal Circuit rejected the argument that because the jury determined that the prior art did not anticipate or make obvious the claimed invention, the claims necessarily met Step II, noting the fact that the claims may not have been anticipated or obvious does
not suggest that the idea of “determining” and “outputting” is not abstract, much less that its implementation is not routine and conventional.

At Step I of the Alice/Mayo Test for the ‘142 patent, the Federal Circuit found that the ‘142 patent itself demonstrates that the claims were directed to abstract ideas, analogizing the technology to post offices, and demonstrating that the concepts were well-known and abstract.  At Step II, again the ‘142 patent was its own undoing, the Federal Circuit finding that the “specification thus confirms that the implementation of the abstract idea is routine and conventional.”

At Step 1 of the Alice/Mayo Test for the ‘601 patent, the Federal Circuit again found that patent was its own undoing, acknowledging that virus screening was known prior to the invention.  As a result the Federal Circuit said that virus screening is both well-known and an abstract idea.  The Federal Circuit disagreed that the narrowness of the claim made it patent eligible, noting that a narrow claim directed to an abstract idea is not necessarily patent eligible.  The Federal Circuit said that the claims were directed to the use of conventional or generic technology in a nascent but wellknown environment, without any claim that the invention reflects an inventive solution to any problem presented by combining the two.

What is most notable about the case is Judge Mayer’ concurrence, where he makes to points:

(1) patents constricting the essential channels of online communication run afoul of the First Amendment; and

(2) claims directed to software implemented on a
generic computer are categorically not eligible for patent.

Mayer comments that although the claims at issue here disclose no new technology, they have the potential to disrupt, or even derail, large swaths of online communication.  He further suggests that Essential First Amendment freedoms are abridged when the Patent and Trademark Office (“PTO”) is permitted to balkanize the Internet, granting patent owners the right to exact heavy taxes on widely-used conduits for online expression.  Mayer points to the distinction between idea and expression in copyright law as providing a balance between the First Amendment and the Copyright Act by permitting free communication of facts while still protecting an author’s expression.”  Mayer further points to fair use, that even permits the use of the author’s expression.  He concludes that restrictions on patent eligibility restrictions on subject matter eligibility can be used to keep patent protection within constitutional bounds. He states that:

Section 101 creates a “patent-free zone” and places within it the indispensable instruments of social, economic, and scientific endeavor.

He believes that Section 101, if properly applied, can preserve the Internet’s open architecture and weed out those patents that chill political expression and impermissibly obstruct the marketplace of ideas.

Mayer goes on to state that “m]ost of the First Amendment concerns associated with patent protection could be avoided if this court were willing to acknowledge that Alice sounded the death knell for software patents.  Arguing that software is a form of language, he states that it is It is inherently abstract because it is merely an idea without physical embodiment, and concludes that all software implemented on a standard computer should be deemed categorically outside the bounds of section 101.

This is justified in Mayer’s mind because computer are indispensible, and a basic tool of modern life and thus not subject to the patent monopoly:

In the section 101 calculus, adding software (which is as abstract as language) to a conventional computer (which rightfully resides in the public domain) results in a patent eligibility score of zero.

Mayer goes on to identify four insurmountable problems with patent protection for software:

1. Their scope is generally vastly disproportionate to their technological
   disclosure.
2. They provide incentives at the wrong time.
3. Their sheer number.
4. Most fundamentally, generically implemented software invariably lacks the concrete borders the patent law demands.

He concludes that eliminating generically-implemented software patents would clear the
patent thicket, ensuring that patent protection promotes, rather than impedes, “the onward march of science,” and allowing technological innovation to proceed apace.