Patent Eligibility Trends Since Alice

35 U.S.C. 101 Whoever invents or discovers any new and useful (1) process, (2) machine, (3) manufacture, or (4) composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. In Diamond v. Chakrabarty, 447 U.S. 303 (1980), the Supreme Court stated that Congress intended statutory subject matter to "include anything under the sun that is made by man. But, [t]his is not to suggest that 101 has no limits, or that it embraces every discovery. (Diamond v. Chakrabarty) And, over the years, the Supreme Court has created exceptions to patent-eligible subject matter 2

35 U.S.C. 101 The Supreme Court has created three major judicial exceptions to patent eligibility: 1. Laws of Nature 2. Natural Phenomena 3. Abstract Ideas Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012) is the leading case for patent eligibility when the claim may be directed to one of the first two above In Alice Corp. Pty. Ltd. v. CLS Bank Int l, 134 S. Ct. 2347 (2014), the Supreme Court addressed the third 3

Alice v. CLS Bank Basic Facts: Alice Corp. is an Australian patent assertion entity that obtained U.S. patents for software designed to mitigate settlement risk. Settlement risk is the problem of only one party in a financial exchange satisfying its obligations. Alice s patents contained method (process), computerreadable media (article of manufacture), and system (machine) claims. Supreme Court used Claim 33 of U.S. Patent No. 5,970,479 as a representative claim, which was a method claim

Alice v. CLS Bank Representative Claim 33: A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of: (a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions; (b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record; (c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and (d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

Alice v. CLS Bank Basic Facts (procedurally): CLS Bank sought a declaratory judgment in District Court regarding four of Alice s patents Alice countersued for infringement District Court found the four patents invalid under Section 101 Federal Circuit panel reversed District Court (2-1) Opinion was vacated and case was reheard en banc 135 page en banc opinion Per curiam affirmance Seven different opinions

Federal Circuit Decision Judge Method CR-Media System Lourie Not Eligible Not Eligible Not Eligible Dyk Not Eligible Not Eligible Not Eligible Prost Not Eligible Not Eligible Not Eligible Reyna Not Eligible Not Eligible Not Eligible Wallach Not Eligible Not Eligible Not Eligible Radar Not Eligible Not Eligible Eligible Linn Eligible Eligible Eligible Moore Not Eligible Not Eligible Eligible O Malley Eligible Eligible Eligible Newman Eligible Eligible Eligible

Alice at the Supreme Court The Supreme Court found all claims patent ineligible, and thus, invalid. The Alice Test: Step One: Is the claim directed to an abstract idea? Step Two: Are the claim s elements, considered individually and as an ordered combination, sufficient to ensure that the claim as a whole amounts to significantly more than an abstract idea? (i.e., is there an inventive concept?)

Step One: Abstract Idea What is an abstract idea? Begin with: Pre-emption is the concern that drives precluding abstract ideas from patentability Alice In what ways does that concern manifest itself: Fundamental economic or business practice (mitigation of settlement risk in Alice) Methods of organizing human activity (hedging of risk in Bilski) An idea itself (standing alone) (a principle, a motive, an original cause) A mathematical relationship (the formula for computing alarm limits in Flook and for converting binary-coded decimal numbers to pure binary numbers in Benson)

Step Two: Significantly More What is significantly more? Begin with pre-emption again: What limitations are present that narrow the claim so that it does not amount to a claim on the abstract idea? Improvements to another technology or technical field (mathematical formula applied in a specific rubber molding process using temperature measurements from a thermocouple in Diehr) Improvements to the functioning of a computer or the internet itself (e.g., a new way to open a webpage within a browser) Applying the abstract idea with, or by use of, a particular machine (a new electrical circuit design)

What is NOT Significantly More Examples of NOT significantly more The performance of a business practice known from the pre-computer world with the requirement to use computers (Alice) Requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry (Alice) Adding insignificant pre-solution activity (e.g., data gathering) or post-solution activity (e.g., printing, displaying)

Examples Example 1: Actual Claim Rejected by PTO Yesterday A wheeled medical cart having a processor computing device configured to: communicate with an application server; access a plurality of medical cart applications located on the application server; identify a medical device operating on the wheeled medical cart or a medical device in communication with the computing device; and filter determine the plurality of medical cart applications in a medical cart application database on the application server that are accessible to the wheeled medical cart, wherein accessibility is determined based on the identified medical device operating on the wheeled medical cart or the identified medical device that are in communication with the processor in communication with the computing device.

Examples Example 1: The Examiner s Rejection The claim[] is directed to the abstract idea of comparing new and stored information and using rules to identify options. The steps of filtering applications based on selected criteria (or a medical device) and displaying the filtered applications merely describe the concept of comparing new and stored information and using rules to identify options. The claim does not include additional elements that are sufficient to amount to significantly more than an abstract idea because the computer as recited is a generic computer component that performs generic computer functions that are well-understood, routine, and conventional activities previously known to the industry. The recited processor (computing device), medical device, and server do not add meaningful limitations to the idea of comparing new and stored information and using rules to identify options beyond generally linking the system to a particular technological environment, that is, implementation via computers.

What Arguments Can be Made? Example 1: Actual Claim Rejected by PTO Yesterday A wheeled medical cart having a processor computing device configured to: communicate with an application server; access a plurality of medical cart applications located on the application server; identify a medical device operating on the wheeled medical cart or a medical device in communication with the computing device; and filter determine the plurality of medical cart applications in a medical cart application database on the application server that are accessible to the wheeled medical cart, wherein accessibility is determined based on the identified medical device operating on the wheeled medical cart or the identified medical device that are in communication with the processor in communication with the computing device.

Examples Example 2: Claim Currently Being Litigated 1. A system for customizing a product according to a user s preferences comprising: a remote server including a database configured to store a product preference of a predetermined product for at least one user; and a first communication module within the product and in communication with the remote server; wherein the remote server is configured to receive the identity of the predetermined product and the identity of the at least one user, retrieve the product preference from the database based on the identity of the predetermined product and the identity of the least one user and transmit the product preference to the first communication module.

A Few Effects of Alice Increased prosecution costs: USPTO is putting the burden on applicants to show subject matter eligibility, which increases the costs and time required for prosecuting patent applications in the computer arts Devaluation of Computer Related Patents: Companies should review their current patent portfolio to ensure that they claim technical solutions More Options Against Trolls: When faced with a patent troll litigation, there are now more options for attacking computer-related patents

Questions?