The Software IP Report

When to Apply Section 101? Federal Circuit Divided

By Charles Bieneman

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

Should a court should evaluate patent claims for statutory subject matter under 35 U.S.C. § 101 before or after considering validity based on prior art?  In MySpace, Inc. v. Graphon Corp., No. 2011-1149 (Fed. Cir. March 2, 2012), all panelists agreed on the invalidity of the software patent claims at issue.  However, the majority and dissenting opinions expose in stark relief the two sides of the evolving debate concerning how — and when — Section 101 analysis should be conducted in the wake of Bilski v.  Kappos.

Judges Plager and Newman, in the majority, thought it proper to invalidate the patent claims as anticipated or obvious based on prior art.  Judge Mayer, on the other hand, agreed that the patent claims were invalid, but nonetheless sharply dissented, castigating the majority for not determining whether the patent claims recited statutory subject matter as a threshold test.  

Background

The four patents at issue claimed “various aspects of” an invention “that enabled a user to control the creation and classification of the user’s own database entry over a computer network such as the Internet.”  More than two years before the priority date of the patents-in-suit, the “Mother of all Bulletin Boards,” or “MBB,” had been made available for public use.  The MBB used a hierarchical file system rather than a relational database.  The patent owner argued that the term “database” in the claims only covered relational systems.  However, the district court agreed with the accused infringers that “database” included both hierarchical and relational systems.  Therefore, the district court found that MBB was invalidating prior art, and granted the accused infringers’ summary judgment motion under 35 U.S.C. §§ 102 and 103.

Holding

“[T]he case is properly decided under §§ 102 and 103 of the Patent Act and not under § 101, and . . . the district court did not err in its grant of summary judgment of invalidity of the patents-in-suit under those sections.”

The Majority Opinion

The majority agreed that the district court had properly construed “database” to include both hierarchical and relational systems, and moreover rejected a number of other claim construction arguments set forth by the patent owner.  Therefore, the MBB was invalidating prior art.  With the relatively simple questions of claim construction and prior art invalidity disposed of, the majority went on to address Judge Mayer’s dissenting opinion that the case should have been decided under Section 101.

Judge Plager’s opinion is remarkably candid.  “The problem with addressing § 101 initially,” the majority explained, is that the exercise involves the difficult task of determining whether an invention embodies an “abstract idea,” that is, whether: “in the broad sweep of modern innovative technologies, does this invention fall outside the breath of human endeavor that possibly can be patented under § 101?”

As the majority discussed in some detail, courts have had difficulty in understanding what are “abstract ideas.”  This difficulty has resulted in “indeterminacy of the law governing patents . . . becoming an even greater problem now” than in the past.  Indeed, a perusal of the post-Bilski Section 101 cases summarized at The SWIP Report’s Patentability page reinforces the notion that it is difficult to discern a consistent logic in recent Section 101 jurisprudence.

As an aspiring oenophile, I personally enjoyed the Court’s comparison of attempts to categorize subject matter as patentable, or not, to attempts to assign adjectives to wine.  But the point is not lost.  Determinations of validity under 35 U.S.C. §§ 102, 103, and 112 are, as Judge Plager noted, based on generally well-understood criteria.  Accordingly, Judges Plager and Newman thought that courts should “avoid the swamp of verbiage that is § 101 by exercising their inherent power to control the processes of litigation” and consider first questions of validity arising under Sections 102, 103, and 112, taking up Section 101 questions only as a last resort.

The Dissent

Judge Mayer began by citing numerous Supreme Court and Federal Circuit cases, including Bilski v. Kappos, for the proposition that a determination of whether claims recited statutory subject matter was a threshold test to be administered prior to other questions of patent validity.  The dissent then turned to whether the claims in this case recited patentable subject matter, characterizing those claims as “significantly broader in scope and having the potential to wield a far greater preemptive power than those at issue in Bilski.”

Because the patents’ “potential scope” was “staggering,” cutting “across vast swaths of the Internet and potentially extending to most online advertising and social networking sites,” Judge Mayer thought that these patents, like the patent at issue in Bilski, were “directed to a fundamental and widely understood concept,” and were thus non-statutory.  The patents were “not unpatentable because they lack any practical utility,” but rather fell “outside the ambit of section 101 because they are too useful and too widely applied to possibly form the basis of any patentable invention.”  (Emphasis in original.)

The claims here were not made patentable simply because they recited specific method steps.  To the contrary, the patents were problematic because they took a broad concept and implemented it “using conventional computer technology.”  Such claims, said Judge Mayer, are not patentable.  Likewise, Judge Mayer noted that the various Supreme Court opinions in Bilski did not, on the whole, dispel the possibility that business methods in general are not patentable.

Judge Mayer took issue with those who thought that Section 101 should be a “a coarse eligibility filter,” and that invalidity analyses using prior art under Sections 102 and 103, or the written description requirement under Section 112, “should be used to read out patents of dubious quality.”  Poor quality business method and software patents is a problem that reliance on Sections 102, 103, and 112 has not corrected.  Therefore, according to Judge Mayer, Section 101 should be vigorously applied to meet the Constitutional objectives of our patent system.