United States: Patent-Eligibility After Alice: A Summary Of Decisions That Found Software Inventions Eligible For Patenting

Since the June 2014 U.S. Supreme Court decision in Alice Corporation Pty Ltd. v. CLS Bank Int'l, at least 16 district court decisions, at least three Federal Circuit decisions, and a number of Patent Trial and Appeals Board (PTAB) decisions have overturned software and business method patents under the new patent-eligibility standard of Alice.

While many of the cases explained why the specific claims failed to satisfy patent-eligibility requirements, for the most part the cases provided little guidance to help the patent community identify what types of claims would be patent-eligible. The USPTO has promised to issue a guidance memo on this topic, but reports of the publication date of the memo have repeatedly moved that date forward.  Originally predicted to be published in August 2014, at the time of this writing the latest predicted publication date was December 2014.

In the interim, patent applicants can find some guidance in the handful of district court and PTAB decisions that refused to overturn patent claims.  A summary of several of those cases, with links to the cases and patents, follows:

  • In The California Institute of Technology v. Hughes Communications (C.D. Ca. Nov. 3, 2014), the court denied a motion for summary judgment of invalidity of certain patents covering error correction technology.  The court explained that "[w]hen claims provide a specific computing solution for a computing problem, the claims should be patentable, even if their novel elements are mathematical algorithms." Although the court noted that the claims could generally cover an abstract idea of encoding and decoding data for error correction, the additional limitations represented "sufficiently inventive concepts" that were "narrowly defined" and did not preempt the field of error correction.
  • In Card Verification Solutions LLC v. Citigroup Inc. (N.D. Il. Sept. 29, 2014), the court denied a motion to dismiss which argued that a patent covering a method of verifying an electronic transaction was invalid under 35 U.S.C. § 101.  Notably, unlike many other court decisions which discussed only the independent claims of the patent, this decision also focused on the patent's dependent claims, which required the generation of pseudorandom tags and the attachment of those tags to confidential data.  Although the court found the claims to be directed to an abstract idea, it also found the additional limitations to be significant enough to "includ[e] pseudorandom generating tag software that could not be done with pen and paper."  While noting that "[t]ypically, transforming data from one form to another does not qualify as the kind of transformation regarded as an important indicator of patent eligibility," the court also said that "here, the claimed invention goes beyond manipulating, reorganizing or collecting data by actually adding a new subset of numbers or characters to the data, thus fundamentally altering the original confidential information."
  • In AutoForm Engineering GmbH v. Engineering Technology Associates, (E.D. Mich. Sept. 5, 2014), the court addressed eligibility of a patent covering software for designing sheet metal forming tools.  The court stated that the claims contained "numerous limitations that narrow the scope of the patent," and thus make it cover more than just an abstract idea. These limitations included steps that required "arranging sectional profiles along the smooth component edge" and "laterally interconnecting the sectional profiles by a continuous surface to form the geometry of the addendum zone of the tool."
  • In PNC Bank N.A. v. Secure Axcess LLC (PTAB Case CBM2014-0010, Sept. 9, 2014), the Board considered a patent covering a system and method for authenticating a web page. The PTAB found the claims to be patent-eligible under 35 U.S.C. § 101 because the claims "require . . . a change that cannot be performed in the human mind."  The Board noted that "[c]laim 1, as a whole, relates to a computer-implemented method to transform data in a particular manner—by inserting an authenticity key to create formatted data, enabling a particular type of computer file to be located and from which an authenticity stamp is retrieved. On its face, there is nothing immediately apparent about these physical steps that would indicate the claim is directed to an abstract idea."
  • In U.S. Bancorp v. Solutran, Inc., (PTAB Case CBM2014-00076, Aug. 7, 2014), the Board considered eligibility of a patent covering a method of processing checks and check transactions.  The Board first noted that "processing paper checks is more akin to a physical process than an abstract idea." Although the claims recited some "fundamental economic practices," claim elements such as "receiving said paper checks and scanning said checks with a digital scanner and comparing by a computer said digital images with data in the data file to find matches are not fundamental economic practices, mathematical algorithms, or basic tools of scientific and technological work."

[Hat tip to Dannon Albee for providing a comment that prompted the idea for this post.]

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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