The Software IP Report

Already Alice Corp. v. CLS Bank Has Brought a Sea-Change in Patent-(In)eligibility

By Charles Bieneman
09/15/2014

Categories: Patent Eligibility, Software Patents, The Software IP Report

In the four years leading up to Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014), the U.S. Supreme Court addressed patent-eligible subject matter under 35 U.S.C. § 101 in Bilski v. Kappos and Mayo v. Prometheus.  Both decisions clearly cut back on the anything-goes approach to determining patent-eligible subject matter that prevailed after the Federal Circuit’s decision in State Street Bank and Trust Company v. Signature Financial Group, Inc., 149 F.3d 1368 (Fed. Cir. 1998). However, after just a few months of lower court activity, it is clear that, in terms of limiting patentability of software and business method related inventions, Bilski and Mayo have nothing on the impact of Alice. In just a few months, the federal district courts, and the Federal Circuit, have issued a rash of decisions invalidating patent claims under Section 101; only a few decisions have gone the other way.

Section 101 at the Federal Circuit after Alice

Post-Alice Federal Circuit cases include Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., invalidating claims “directed to a device profile and a method for creating a device profile within a digital image processing system,” and Buysafe, Inc. v. Google Inc., No. 2013-1575 (Fed. Cir. Sept. 3, 2014), invalidating claims directed to “providing a guaranty service for online transactions,” both covered in prior posts on this blog. Further, in Planet Bingo, LLC v. VKGS LLC, No. 2013-1663 (Fed. Cir. Aug. 26, 2014), the Court made quick work of claims directed to software for managing a bingo claim, upholding a pre-Alice district court decision invalidating the claims of U.S. Patent Nos. 6,398,646 and 6,656,045. Writing for a unanimous panel in an opinion designated non-precedential, Judge Hughes agreed with the district court that that managing the game of bingo “consists solely of mental steps which can be carried out by a human using pen and paper.” The patent claims offered no additional innovation to save their patentability.

Section 101 Invalidity in the District Courts

District courts have not only been invalidating patent claims under Section 101, but they have been doing so at the pleadings stage and before claim construction. Examples include:

• Loyalty Conversion Sys. Corp. v. Am. Airlines, No. 2:13-CV-655 (E.D. Tex. Sept. 3, 2014) — Federal Circuit Judge Bryson, sitting by designation, granted judgment on the pleadings that U.S. Patent Nos. 8,313,023 and 8,511,550, directed to managing airline loyalty programs, were not patent-eligible, noting that no functions were claimed that were “not within the routine capacity of a generic computer with conventional programming.”
• Tuxis Techs. v. Amazon, No. 13-1771-RGA (D. Del. Sept. 3, 2014) — the court granted a motion to dismiss for failure to state a claim, holding that claims of U.S. Patent No. 6,055,513, directed to an e-commerce method of upselling, recited an unpatentable abstract idea.
• Genetic Techs. v. Lab. Corp. of Am. Holdings, No. 12-1736-LPS-CJB (D. Del. Sept. 3, 2014) — a magistrate provided a report and recommendation that a motion to dismiss should be granted on a complaint alleging patent infringement where claims of U.S. Patent No. 7,615,342 were directed to unpatentable subject matter relating to analyzing a genotype to predict physiological traits.
• Eclipse Ip Llc v. McKinley Equip. Corp., No. SACV 14-742-GW(AJWx) (C.D. Cal. Sept. 4, 2014) – the court held first that a motion to dismiss based on alleged Section 101 invalidity was ripe before claim construction, and then that claims of four patents failed to recite patent-eligible subject matter. The patent claims were generally directed to a computer-implemented method of managing communications related to people performing tasks.

And courts have been granting motions for summary judgment of invalidity under 35 U.S.C. § 101:

• Digital v. Google, Inc., No. 11-318-LPS (D. Del. Sept. 3, 2014) — claims of 5,884,270 and 5,884,272 directed to methods of allowing anonymous communications, were unpatentable. The court explained that the claims were directed to methods that human job headhunters had been manually performing for years.
• Every Penny Counts v. Wells Fargo Bank, N.A, 8:11-cv-2826-T-23TBM (M.D. Fla Sept. 11, 2014) – granted summary judgment invalidating, under Section 101, patent claims drawn to “the concept of routinely modifying transaction amounts and depositing the designated, incremental differences into a recipient account,” “a technique known from antiquity in which a small saving on many occasions accumulates into a large saving.”
• DietGoal Innovations LLC v. Bravo Media LLC, No. 13 Civ. 8391 (PAE) (S.D.N.Y. July 8, 2014) – as reported earlier on this blog, claims directed to a computerized meal planning system were held not to be patent-eligible.
• Comcast IP Holdings I, LLC v. Sprint Communs. Co. L.P., No. 12-205-RGA (D. Del. July 16, 2014) – as also previously reported on this blog, claims directed to receiving a user input to optimize a telephony network were held not patent-eligible.

Rare Cases: Patents Not Found Ineligible

Attempts to invalidate patent claims under 35 U.S.C. § 101 are not always successful, especially in cases that involve software, but not business methods. In a recent example, in Autoform Eng’g Gmbh v. Eng’g Tech. R. Steven Whalen Assocs., No. 10-14141 (E.D. Mich. Sept. 5, 2014), the court denied a motion for summary judgment of Section 101 invalidity, explaining that although patent claims “include or rely on some basic concepts in the design of sheet metal forming tools, the patents also include numerous limitations that narrow the scope of the patent,” and thus the claims were directed to more than an abstract idea.

Finally, at least one court decided to wait to resolve the question of Section 101 invalidity until after claim construction, even though it appeared that the patent claims at issue were not patent-eligible. Data Distrib. Techs., LLC v. Brer Affiliates, Inc., No. 12-4878 (JBS/KMW) (D. N.J. Aug. 19, 2014). The claims of U.S. Patent No. 6,529,908, entitled “Web-updated database with record distribution by email,” were directed to an online system for managing user records; one suspects that other courts may not have waited for claim construction to make a decision concerning patent-eligibility.