March 28, 2017

March 28, 2017

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March 27, 2017

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Recent District Court reliance on Federal Circuit’s Enfish / McRO decisions may signify trend for Alice/Mayo patent eligibility test

In June 2014 the Supreme Court introduced the two-step Alice/Mayo test for patent eligibility, intended to exclude from patenting claims directed to ineligible abstract ideas under 35 USC 101.  Since that time, the Federal Circuit has issued numerous precedential opinions applying this test to software claims.  This body of law, however, has yet to provide a decisional mechanism beyond factual comparisons between a patent claim at issue with claims previously adjudicated under Alice/Mayo.  Eventually this unwieldy state of the law will evolve into something more manageable. In the meantime, district courts continue to struggle with applying the Alice/Mayo standard to software claims.  As expressed by Judge Gilliam of the Northern District of California, “[w]hile the Court is of the view that a more concrete standard for identifying abstract ideas would improve predictability and enable more efficient use of judicial and party resources, it will do its best to apply the current guidance.”

Enfish v. Microsoft Corp. and McRO v Bandai Namco Games America Inc. stand out from among the more recent Federal Circuit decisions applying the Alice/Mayo test to software claims.  These are the first decisions upholding the validity of software patent claims as not directed to a patent-ineligible abstract idea (prior decisions either held, or assumed, a software claim was directed to an abstract idea).  More importantly, though, the holdings in Enfish and McRO are based on a legal framework not so heavily dependent upon finding a factual similarity with a previously adjudicated patent claim before deciding whether the claim is patent eligible.  Instead, the eligibility determination is more grounded in a statement of law embodying generally-applicable principles concerning invention. For example, the panel in Enfish phrased the question of patent-eligibility this way:

“whether the focus of the claims is on the specific asserted improvement in computer capabilities . . . or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool.”

The Federal Circuit has not endorsed this statement of law as a definitive test for determining patent-eligibility of computer-implemented inventions. Indeed, the majority in the more recent Federal Circuit case of Amdocs v. Openet Telecom made this point loud and clear.  Nevertheless, a high proportion of recent district court decisions on motions for ineligibility under Section 101 have turned to the guidance from Enfish (and similar guidance from McRO) to decide whether a claim is directed to an abstract idea.  These decisions are surveyed below, followed by some thoughts on the implications of this recent trend for how district courts are deciding questions of patent eligibility.

District Court Decisions (Dec. 2016 – Jan. 2017)

In Synchronoss Techs., Inc. v. Dropbox Inc. the Northern District of California on Dec. 22, 2016, denied a motion to dismiss for lack of eligible subject matter under Section 101.  After acknowledging the lack of consensus on what constitutes an abstract idea under Alice/Mayo, the court, citing to Amdocs, concluded that the holding in Enfish “compels” the conclusion that the claims were not directed to an abstract idea.  According to the court, the claims were like those examined in Enfish and McRO because the claims were directed to an improvement in computer functionality, and imposed the specific limitations sufficient under Enfish and McRO to survive a motion to dismiss.  The court went further, stating that the conclusion of patent-eligibility was, as in Enfish, “bolstered” by the patent specification.  This further support for eligibility was explained by reciting several passages from the specification listing the various ways that the invention improves the manner in which computers synchronize data between networked devices, e.g., making the process faster, reducing bandwidth and storage space, synchronization across different formats, etc.

Two weeks after the Synchronoss decision, the District of Delaware in Ioengine v. Interactive Media Corp. also denied a motion for summary judgment of ineligibility because the claims were not directed to an abstract idea.  Here, the eligible patent claims were directed to providing a user interface for portable electronic devices.  The court felt the claims, like the patent-eligible claims in McRO, recited a specific arrangement of components and a very specific implementation and structure of the executable program code. “More important,” according to the court, the claims were directed, as in Enfish, to an improvement in computer functionality, which was supported by the specification.

One day after the decision in Ioengine the Eastern District of Virginia in Va. Innovation Scis. (VIS), Inc. v. Amazon.com, Inc. relied on Enfish and McRO to find claims patent ineligible.  The VIS court noted, citing to Amdocs, that by their nature abstract ideas are often hard to define, but then concluded that the guidance in Enfish and McRO was “instructive” for deciding whether the claims were directed to an abstract idea.  According to the court, Enfish and McRO ask what problem an invention seeks to resolve. In both cases those problems were narrow and computer-centric.  And in both cases the patents were oriented to specific improvements in an existing computer process, i.e., a self-referential database for improved read/write capabilities( in Enfish) and overcoming a labor-intensive process in lip sync videos (in McRO).  These were attributes of claims not directed to an abstract idea.  The claims before the court, however, were instead directed to a more generalized problem of reproducing video from a mobile phone on a separate display device.  The improvement described in the patents was not computer-specific, as in the case of Enfish/McRO.  As the court put it, the patent-eligible claims in Enfish/McRO sought to improve data processing, whereas the abstract ideas recited in the claims at-issue were possible only because of existing data processing capabilities. Thus, the claims were found ineligible as directed to an abstract idea.

A few weeks after the VIS decision, the Northern District of California in Speedtrack Inc. v. Amazon denied a motion for patent ineligibility under Section 101.  The Speedtrack court found the claims not directed to an abstract idea.  Citing to Enfish, the court found the claims directed to a specific improvement in computer functionality.  Therefore, the claims were not directed to an ineligible abstract idea.

Concluding Thoughts

Is it purely coincidence that a large majority of the patent claims reviewed by district courts under Section 101 since December 2016 relied on the guidance from Enfish and McRO?  Perhaps, but it seems more likely this is no coincidence.  These decisions give a district court a rule-based approach to decide whether a claim is impermissibly abstract for patenting under Section 101.  A court should therefore naturally choose to follow the guidance from Enfish or McRO if it leads to the same conclusion as was time and resource-intensive process of comparing factual similarities between patent claims.  The big question is, of course, do the approaches advocated in Enfish or McRO give the same answer?

The Federal Circuit’s accepted manner of resolving questions of patent eligibility under Alice/Mayo and current rejection of a definitive test for spotting an abstract idea in patent claims originates with statements expressed by the Supreme Court in Alice v. CLS Bank.  The Alice court cautioned against using

overly formalistic approaches to subject-matter eligibility that invite manipulation by patent applicants.  Allowing the determination of patent eligibility to ‘depend simply on the draftsman’s art . . . would ill serve the principles underlying the prohibition against patents for “ideas” or phenomena of nature.’ . . . .Thus, claim drafting strategies that attempt to circumvent the basic exceptions to Section 101 using, for example, highly stylized language, hollow field-of-use limitations, or the recitation of token post-solution activity should not be credited.

The Federal Circuit’s acceptance of a more rule-based approach to eligibility, along the lines of Enfish and McRO, will therefore depend on whether the court feels confident that the rule will not be easily “manipulated” by a skilled patent draftsman.  If Enfish or McRO have indeed arrived at such a rule (or something close to it), then making claim-by-claim comparisons with previously adjudicated claims should gradually become less necessary for deciding eligibility cases. Needless to say, this outcome would be heartily welcomed by district courts faced with deciding motions to dismiss patent claims that cover complex technologies.

It will be interesting to see how the Federal Circuit reacts to the recent district court decisions relying on Enfish and McRO, if indeed those decisions reflect a trend for 2017.  Assuming a trend, the Federal Circuit should, sooner rather than later, opine on the suitability of the Enfish/McRO approach for determining whether patent claims fall within the abstract idea exception to patent eligibility under Section 101.

© Copyright 2017 Squire Patton Boggs (US) LLP

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About this Author

James Reed, Squire Patton Boggs, Intellectual Property Counsel, Patent Lawyer,
Senior Patent Counsel

James Reed, patent counsel in the Intellectual Property & Technology Practice Group, focuses on patents in the mechanical, electrical and chemical engineering, data management and security, social media/information sharing and mobile telecommunications fields. His practice emphasizes preparation and prosecution of domestic and foreign utility and design patents, intellectual property due diligence, counseling and licensing transactions, and litigation of patent rights.

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