United States: The Continuing "Evolution" Of Alice: A GUI Example

On January 18, 2017, the Federal Circuit, in Trading Technologies International, Inc. v. CQG, Inc., No. 2016-1616 (Fed. Cir. Jan. 18, 2017) (NEWMAN, J.), issued a non-precedential decision affirming the district court's holding that claims directed to "[a] method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange" are patent-eligible subject matter.1  Although the decision is non-precedential, it clarifies an emerging framework for overcoming Section 101 challenges to patents directed to graphical user interfaces (GUIs) specifically, and, more generally to all patents subject to possible invalidity arguments under Alice.2

The alleged infringer of the patents at issue3 argued that the asserted claims are invalid under Alice because they are directed to "the abstract idea of placing an order for a commodity on an electronic exchange, based on observed market information, as well as updating the market information."4  The alleged infringer argued that the asserted claim "is nothing more than 'a fundamental economic practice long prevalent in our system of commerce.'"5 Claim 1 of the '304 patent is representative of the claims at issue:

  1. A method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on a graphical user interface, the method comprising;dynamically displaying a first indicator in one of a plurality of locations in a bid display region, each location in the bid display region corresponding to a price level along a common static price axis, the first indicator representing quantity associated with at least one order to buy the commodity at the highest bid price currently available in the market; dynamically displaying a second indicator in one of a plurality of locations in an ask display region, each location in the ask display region corresponding to a price level along the common static price axis, the second indicator representing quantity associated with at least one order to sell the commodity at the lowest ask price currently available in the market; displaying the bid and ask display regions in relation to fixed price levels positioned along the common static price axis such that when the inside market changes, the price levels along the common static price axis do not move and at least one of the first and second indicators moves in the bid or ask display regions relative to the common static price axis; displaying an order entry region comprising a plurality of locations for receiving commands to send trade orders, each location corresponding to a price level along the common static price axis; and in response to a selection of a particular location of the order entry region by a single action of a user input device, setting a plurality of parameters for a trade order relating to the commodity and sending the trade order to the electronic exchange.

In the infringement action, the district court ran through the standard Alice two-step analysis.  First, under step 1, it determined that the asserted claims are not directed to an abstract idea because they are not "directed to solely 'setting, displaying, and selecting' data or information that is visible on the GUI device."  Instead, the district court found that the claims recite a method of "solving a problem that existed with prior art GUIs," 6 namely that rapid fluctuations of ask and bid prices in the market sometimes caused traders to miss trades or to execute trades at unintended prices.  Thus, because the claims specifically address a problem in the prior art GUIs and improve their capability, they are not directed to an ineligible concept under Section 101.

Perhaps hedging its own bet that the claims are not directed to an abstract idea, the district court then proceeded to the second Alice step.  The court determined that the element of the "static price axis" adds the necessary inventive concept, "which eliminated some problems of prior GUIs relating to speed, accuracy and usability.7  The district court explained that the "static price axis" element "seems to be the 'inventive concept' that allowed some traders the ability to more efficiently and accurately place trades on electronic trading systems."8  Thus, the claims constituted "significantly more than a patent on the [ineligible concept] itself."9

Citing DDR Holdings, the district court further explained that the elements of the asserted claims, when "'taken together as an ordered combination, . . . recite an invention that is not merely the routine or conventional use' of computers or the Internet."10  Overall, the district court concluded that the claims survived the analyses under both Alice Step 1 and Step 2.

In affirming the holding that the claims were not directed to ineligible subject matter, the Federal Circuit panel largely reiterated the reasoning of the district court.  In particular, Judge Newman cited the lower court's rationale that "the graphical user interface system of these two patents is not an idea that has long existed, the threshold criterion of an abstract idea and ineligible concept."11  Judge Newman further clarified that "[a]bstraction is avoided or overcome when a proposed new application or computer-implemented function is not simply the generalized use of a computer as a tool to conduct a known or obvious process, but instead is an improvement to the capability of the system as a whole."12

The panel also included some guidance to lower courts and practitioners in applying the "evolving" Alice framework.  It explained that close questions of subject matter eligibility should be "considered along with the understanding flowing from review of the patentability criteria of novelty, unobviousness, and enablement" because these statutory criteria provide context for the analysis of eligibility in light of the "patent-based incentive to technological progress."14

In conclusion, the Federal Circuit affirmed a routine application of the Alice two-step framework while carefully pointing out that (a) claims directed to a specific structure that addresses a specifically identified problem will normally overcome Alice Step 1; and (b) courts should assess close questions of subject matter eligibility in the context of the "public interest in innovative advance" by considering the statutory criteria of novelty, unobviousness, and enablement alongside the eligibility issue.

Footnotes

1 Trading Techs. Int'l, Inc. v. CQG, Inc., No. 2016-1616, slip op. at 4 (Fed. Cir. Jan. 18, 2017).

2 Alice Corp. Pty. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014).

3 U.S. Patents No. 6,772,132 and No. 6,766,304, respectively.

4 Trading Techs. Int'l, Inc. v. CQG, Inc., No. 05-cv-4811, 2015 WL 774655, at *3 (N.D. Ill. Feb. 24, 2015).

5 Id. (quoting Alice, 134 S. Ct. at 2356).

6 Id. at *4.

7 Id.

8 Id. at *5.

9 Id. (quoting Alice, 134 S. Ct. at 2355).

10 Id. (quoting DDR Holding, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1259 (Fed. Cir. 2014).

11 Trading Techs. Int'l, No. 2016-1616, slip op. at 8 (citing Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 73 (2012)).

12 Id.

13 Id. at 9.

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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