The Software IP Report

Novelty and Non-obviousness Do Not Save Patent-Eligibility

By Charles Bieneman

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

The Federal Circuit has held that patent claims directed to “performing certain statistical analyses of investment information” are patent-ineligible under the Alice/Mayo abstract idea test and 35 U.S.C. § 101, thus affirming a District Court’s judgment on the pleadings. SAP America, Inc. v. InvestPic, LLC, No. 2017-2081 (Fed Cir. May 15, 2018) (precedential) (opinion by Judge Taranto), joined by Judges Lourie and O’Malley). In the second paragraph of its opinion, the court emphasized that brilliant innovation would not alone save patent-eligibility, nor could novelty and non-obviousness under 35 U.S.C. §§ 102 and 103.

Claims of U.S. Patent No. 6,349,291 are directed to “analysis, display and dissemination of financial information using resampled statistical methods.” These claims represented an innovation, but the innovation was “nothing but a series of mathematical calculations based on selected information in the presentation of the results,” and thus was “an innovation in ineligible subject matter.”

The ’291 patent had been through re-examination proceedings and an appeal to the Federal Circuit. In the appeal, claim terms were construed, and the court “partly reversed and partly vacated the Patent Trial and Appeal Board’s cancellations of various claims” under 35 U.S.C. §§ 102 and 103. Three independent claims remain, two of which were method claims and one of which claimed a system. All of the claims recited performing a statistical analysis on investment data and generating a set of results.

The patent owner tried to rely on McRO, Inc. v. Bandai Namco Games Am. Inc. (Fed. Cir. 2016), but the court thought that “the claims here are critically different.”  The claim in McRO improved operation of a physical display, whereas the claimed improvement here was to “a mathematical technique with no improved display mechanism.”

Further, under part two of the Alice test, there was no “inventive concept” to overcome the abstractness of the claims. Limiting the claims to a field of use, i.e., investment information, was not sufficient. Likewise, claiming “various databases and processors, which are in the physical realm of things” did not suffice, because there was no improvement to computing technology.

Lessons for Practice

Courts have long said that novelty and non-obviousness are separate inquiries from patent-eligibility.  This case puts an exclamation point on that proposition, even if it does not really break new ground. Further, this case demonstrates that even if claims directed to nothing more than processing data can survive Alice, as in McRo, those claims must have some physical result or technological improvement.