United States: Federal Circuit Finds Software-Related Claims Patent Eligible In Enfish, LLC v. Microsoft Corp.

On May 12, 2016, the United States Court of Appeals for the Federal Circuit addressed the patent eligibility of software in Enfish, LLC v. Microsoft Corp., No. 2015-1244 (Fed. Cir. May 12, 2016), concluding that the claimed database software was patent-eligible under 35 U.S.C. § 101 because the claims were not directed to an abstract idea.  The case marks only the second time the Federal Circuit has found software-related claims eligible for patent protection since the Supreme Court's landmark decision in Alice Corp. v. CLS Bank International, ___ U.S. ___, 134 S. Ct. 2347 (2014).

Enfish arose after Enfish, LLC sued Microsoft, alleging that Microsoft infringed two of Enfish's patents—U.S. Patent No. 6,151,604 and U.S. Patent No. 6,163,775—related to a self-referential database.  According to the Enfish patents, a "self-referential database" differs from conventional databases in that it allows all entity types to be stored in a single table and enables the table's columns to be defined by rows in that same table.  Enfish, No. 2015-1244 at *6.

The District Court for the Central District of California's entered summary judgment for Microsoft, finding all claims of the '604 patent and '775 patent invalid as patent-ineligible under § 101; four of the five claims at issue were invalid under § 102 as anticipated by the prior public sale and use of Microsoft's Excel product; and the remaining claim was not infringed by Microsoft's ADO.NET software.  Enfish appealed the summary-judgment order to the Federal Circuit.

The Federal Circuit panel of Judges Hughes, Moore, and Taranto vacated the district court's grant of summary judgment based on § 102 and affirmed the district court's grant of summary judgment of non-infringement.  More significantly, the panel reversed the district court's grant of summary judgment based on § 101, concluding that all the claims in question were directed to patent-eligible subject matter.

Patent eligibility is governed by 35 U.S.C. § 101, which has been the subject of heated discussion in recent years as the courts have repeatedly attempted to define its boundaries.  In Alice, the Supreme Court developed the now well-known two-part patent-eligibility test (referred to here as the Mayo/Alice inquiry): first, determining whether the claim at issue is directed to a patent-ineligible concept; and if so, second, determining whether the claim's elements transform the nature of the claim into a patent-eligible application.

Considering the first part of the Mayo/Alice inquiry, the district court found the claims at issue were directed to an abstract idea of "storing, organizing, and retrieving memory in a logical table" or, more simply, "the concept of organizing information using tabular formats."  Enfish, No. 2015-1244 at *14.  Addressing this inquiry, the Federal Circuit rejected the notion that claims directed to software are inherently abstract:

We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two.  Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly not abstract, such as a chip architecture, an LED display, and the like.  Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis.  Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route.  We thus see no reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract and necessarily analyzed at the second step of Alice, nor do we believe that Alice so directs.  Therefore, we find it relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.

Id. at *11.

The Federal Circuit disagreed with the district court's determination that the claims were directed to merely an abstract idea.  Rather, the Federal Circuit concluded that "describing the claims at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to § 101 swallow the rule."  Id. at *14.

With that in mind, the Federal Circuit found the claims to be directed "to a specific improvement to the way computers operate, embodied in the self-referential table," pointing to specific benefits of the claimed invention over conventional databases, "such as increased flexibility, faster search times, and smaller memory requirements."  Id. at *12, *15.

Having determined that the claims were not directed to an abstract idea, the Federal Circuit declined to proceed to the second part of the Mayo/Alice inquiry.  Id. at *18.  The Federal Circuit also dismissed contentions that a claim is necessarily doomed if the invention is able to run on a general-purpose computer or if the improvement is not defined by reference to "physical" components—two common arguments made by examiners rejecting software-related patent claims, as well as parties seeking to invalidate software-related patent claims, under § 101.  Id. at *16–*18.

Enfish provides much needed clarity and insight with respect to subject-matter eligibility under Alice.   Notably, the USPTO has already issued a memorandum addressing the opinion and reconciling it with the current subject-matter eligibility examination guidelines.  Since the Supreme Court's landmark decision in Alice, the Federal Circuit has found software-related claims patent eligible in one other case—DDR Holdings v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).  The Supreme Court's decision in Alice was presumed by some to represent the death knell for software-related claims.  However, as DDR Holdings and Enfish show, that presumption was premature.  The Federal Circuit has begun to define the contours of subject-matter eligibility of software-related claims in the wake of Alice, to the benefit of all.

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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