United States: Federal Circuit Knocks Out Patents After CBM Challenge

Apple successfully invalidated three patents for failure to recite patent eligible subject matter. Apple, Inc. v. Ameranth, Inc., 2015-1792, 2015-1793 (Fed. Cir. 2016). The patents relate to synchronous communication systems for electronically generating and transmitting menu selections. While the covered technology is not directly related to personalized medicine, the Federal Circuit's review of the patents' specifications and the court's claim constructions in the context of a 35 U.S.C. § 101 challenge is instructive to patent applicants seeking to patent methods that may be characterized as an abstract idea, such as methods linking treatment options or clinical trials to potential patients.

The Patents at issue

Ameranth, Inc. (Ameranth) is the owner of the three patents in issue, namely U.S. Patent No. 6,384,850 ('850 Patent), U.S. Patent No. 6,871,325 ('325 Patent), and U.S. Patent No. 6,982,733 ('733 Patent). The patents are related to each other as parent ('850 Patent), continuation ('325 Patent) and continuation-in-part ('733 Patent). Each patent specification discloses a first menu having categories and items and software that can generate a second menu from that first menu by allowing the categories and items to be selected. The menus can be configured using a graphical user interface and then transmitted to a wireless handheld device.

Claim 1 of the '850 Patent was determined to be representative of the challenged claims and is reproduced below:

  1. An information management and synchronous communications system for generating and transmitting menus comprising:

a central processing unit,

a data storage device connected to said central processing unit,

an operating system including a graphical user interface,

a first menu consisting of menu categories, said menu categories consisting of menu items, said first menu stored on said data storage device and displayable in a window of said graphical user interface in a hierarchical tree format,

a modifier menu stored on said data storage device and displayable in a window of said graphical user interface,

a sub-modifier menu stored on said data storage device and displayable in a window of said graphical user interface, and

application software for generating a second menu from said first menu and transmitting said second menu to a wireless handheld computing device or Web page,

wherein the application software facilitates the generation of the second menu by allowing selection of catagories [sic] and items from the first menu, addition of menu categories to the second menu, addition of menu items to the second menu and assignment of parameters to items in the second menu using the graphical user interface of said operating system, said parameters being selected from the modifier and sub-modifier menus.

Slip Op. at page 5.

A preferred embodiment of the claimed invention is its use in the restaurant industry. In that embodiment, a menu consists of categories such as appetizers and entrees, items such as chicken Caesar salad, modifiers such as dressing, and sub-modifiers such as Italian and bleu cheese.

The case came to the Federal Circuit by Ameranth's appeal of the Patent Trial and Appeal Board's (Board's) finding that the patents are covered business methods ("CBM") eligible for CBM review. Ameranth also argued that the Board erred in misconstruing the claims and in holding that certain claims of the patents failed under 35 U.S.C. § 101. Slip Op. at 8.

Standards of Review and Construction of the Claims

In CBM, the claims are construed according to their broadest reasonable construction in light of the patent's specification. Slip Op. at 9. The Federal Circuit, in reviewing CBM determinations, construes the claims de novo. Id. However, "[i]f the Board makes subsidiary factual findings about extrinsic evidence that underlie its construction,.. [the court reviews] those factual findings for substantial evidence." Id. The court reviews § 101 patent eligibility de novo.

Before entertaining the merits of Ameranth's grounds for appeal, the Federal Circuit reviewed and construed certain claim elements.

Menu

Ameranth had argued to the Board that the term "menu" should be construed as "computer data representing collections of linked levels of choices or options intended for display in a graphical user interface." Slip Op. at 10. The Board disagreed, and construed the term to be a list of options available to the user displayable on a computer. On appeal, Ameranth stated that Board's construction was incorrect because it disregarded that the claimed menus are hierarchical. The Federal Circuit disagreed, noting that the Board was correct in excluding this term from the construction because it was expressly recited in the claims. Id.

Synchronous Communications System

Ameranth also challenged the construction of the term "synchronous communications system." Ameranth alleged the term to be limiting in that it requires "a central back-office server that communicates data updates to and from multiple client devices." Slip Op. at 11. The Board and the Federal Circuit disagreed, noting that "nothing in the patents' specifications indicate that a synchronous communications systems is required to include a central back-office server...." Id.

Central Processing Unit

Ameranth had argued at the Board that the term "central processing unit" should be construed as "central server." Slip Op. at 12. The Board disagreed and construed the term as "the computational and control unit of a computer." Id. The Federal Circuit concurred, declining Ameranth's position because to include these terms would be to "include features of that term that are already recited in the claims would make those expressly recited features redundant." Id.

Ameranth argued on appeal that the Board erred because its construction disregarded the doctrine of claim differentiation, "as claim 5 of the '733 patent expressly recites 'microprocessor.'" Id. The Federal Circuit disagreed, confirming the Board's refusal to apply the doctrine because the doctrine does not apply when the considered claims are not otherwise identical in scope, citing Indacon, Inc. v. Facebook, Inc., 824 F.3d 1352 (Fed. Cir. 2016). In reaching this conclusion, the court focused on the use of the term "microprocessor" in certain claims while other claims recited "central processing unit." The court also found that the Board's construction of the term was consistent with its use in the patent specifications.

CBM Patent Determinations

A CBM patent is defined in §18 of the America Invents Act (AIA) as a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions. Slip Op. at 14, citing Leahy-Smith America Invents Act, Publ. L. No. 112-29, § 18(d)(1), 125 Stat. 284, 331 (2011) (emphasis added).

The US Patent Office promulgated a regulation for determining whether a patent is for technological invention for the purpose of §18. That is, whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution. 37 C.F.R. § 42.301(b). Slip Op. at 14.

The Board found that neither prong of the rule was satisfied. The Board determined that the patents did not claim a technological feature that is novel and unobvious over the art. On the second prong, the Board held that the inventions did not solve a technical problem using a technical solution.

On appeal Ameranth contended that the patents fall within the "technological inventions" exception because the inventions solved "the problem of how to display and synchronize computerized menus on non-standard devices/interfaces." Slip Op. at 15. In rejecting this argument below, the Board explained "that the claims did not recite a solution to this problem, as they do not include recitations about how to display or synchronize the menus, but instead include descriptions about menu generation." Slip Op. at 16.

The Federal Circuit agreed with the Board, finding that neither prong of 37 C.F.R. § 42.301(b) was satisfied. For the first prong the court stated that the claimed systems require only "typical" hardware and "commonly known" programming steps, as so described in the patent's specification. Slip Op. at 16. For the second prong, the court stated that the problem or the solution recited in the claims as non-technical. Ameranth had argued that the patents solved the problem of how to display and synchronize computerized menus on a non-standard devices/interface, but the court found that the claims recited only how to generate the menus. Slip Op. at 16 (emphasis added). Similarly, Ameranth had argued that the '733 Patent was intended to solve a problem in restaurant ordering when customers wanted something unusual and unanticipated, but the court determined that this was more of a business problem than a technical one. Id.

Thus, the Federal Circuit affirmed the Board's holding that the patents were for covered business methods and eligible for CBM reviews.

Section 101 Determinations

To determine whether Ameranth's claims are directed to patent-eligible subject matter under 35 U.S.C. § 101, the court applied the Supreme Court's two-step "Alice" test. Alice Corp. v. CLS Bank Int'l, 134 S.Ct. 2347, 2355 (2014). Slip Op. at 17. The two-step Alice test requires that the PTO or court first determine whether the claims at issue are directed to a patent-ineligible concept, and if so, proceed to the second step of determining whether the claim's elements, considered both individually and as an ordered combination, transform the nature of the claims into a patent-eligible application.

Step One

The Board had determined that all of Ameranth's claims are directed to a patent-ineligible concept, i.e., an abstract idea for "generating a second menu from a first menu and sending the second menu to another location." Slip Op. at 19. On appeal, Ameranth did not contest the general categorization, but argued that the Board erred because it had changed slightly how it characterized the abstract idea between its institution decisions and its final decisions.

In affirming the Board, the Federal Circuit noted that an abstract idea can be described at different levels of abstraction, and the particular expression chosen by the Board does not impact the patentability analysis. Rather, the focus of a step one inquiry is whether the claims "focus on a specific means or method that improves the relevant technology," or are "directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery." Slip Op. at 18, citing McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016).

The court found Ameranth's claims to be the latter, holding that the claims, in essence, are directed to a certain functionality (i.e., the ability to generate menus with certain features) rather than a specific improvement in the way computers operate, as they do not claim a particular way of programming or designing the software to create menus having particular features, but instead merely claim the resulting system. Having determined that the claims are directed to a patent-ineligible concept, the court moved on to step two of the Alice test.

Step Two

Even if the claims are directed in whole or in part to a patent-ineligible concept, the claims may be patent-eligible if claim elements, considered both individually and as an ordered combination, transform the nature of the claims into a patent-eligible application.

The Board determined that the claims also failed this element of the Alice test because the hardware components recited in the claims were "typical" hardware elements. Slip Op. at 19. In addition, the recited menus were described in the specification as being conventional. Id.

On appeal, Ameranth argued that the term "second menu is manually modified after generation" in claim 1 of the '733 Patent transformed the claims to patent-eligible subject matter. Ameranth also focused on the synchronization limitation in independent claims 4, 5, and 12 of the '733 Patent, the printing features of dependent claims 2 and 10 of the '733 Patent, and the recitation of types of ordering in claims 1 to 6 of the '325 Patent, as additional elements that transformed the claims.

The Federal Circuit agreed with the Board that all four features were insignificant post-solution activities that do not transform the claims. Slip Op. at 22. Particularly, the court noted that the preferred embodiment of the claimed invention is a restaurant preparing device that can be used by a server taking orders from a customer. The claimed invention replaces the server's notepad or mental list with an electronic device programmed to allow menu items to be selected as a customer places an order. As noted above, the specifications describe the hardware elements of the invention as "typical" and the software programming needed as "commonly known." The Federal Circuit stated that therefore, the invention merely claims the addition of conventional computer components to well-known business practices.

The Federal Circuit also dismissed Ameranth's argument that programming the software to perform various parts of the claimed systems' functionality was difficult. The court explained that these programming details are not recited in the actual claims, and the degree of difficulty in implementing an abstract idea does not itself render an abstract idea patentable.

The Board had found that certain dependent claims patentable on the ground that they contained inventive features sufficient to transform the abstract idea into a patent-eligible application. These include the feature of linking orders to specific customers of dependent claims 3 and 11 in the '733 Patent and the features involving handwriting and voice capture of dependent claims 6-9 and 13-16 in the '733 Patent. The Federal Circuit disagreed and reversed the Board's holding.

The Federal Circuit stated that the claims essentially cover the classic manual tasks of a restaurant server taking order from a customer and keeping track of which customer placed that order, when done using a computer. However, in addition to expressly reciting that the hardware needed was typical and that the programming steps were commonly known, the specification merely calls for the desired result of associating a customer's order with the customer, with no disclosure of how this would be technically implemented.

Similarly, regarding the claims that require that the second menu is manually modified by handwriting or voice recording, the Federal Circuit also found that there is no recitation of inventive methods for technologically achieving the claimed functionality in the patents. Ameranth conceded that it had not invented voice or handwriting capture technology and it was known in 2001 to use these technologies for entering data into a computer system.

The Federal Circuit noted that a claim that merely describes an effect or result dissociated from any method by which it is accomplished is not directed to patent-eligible subject matter. Here, Ameranth claims no more than the desired result of associating a customer's order with the customer, or the use of existing technologies for entering data into a computer system. Merely pending these insignificant post-solution activities to those independent claims did not make them patent eligible.

Thus, the Federal Circuit held all challenged claims ineligible under 35 U.S.C. § 101.

Lessons for Personalized Medicine

While the claimed technology in this decision is not related to personalized medicine, it does have a feature common to some diagnostic and certain methods used in personalized medicine, that is, computer functionality applied to methods having features that previously were carried out manually by one or several independent users.

The Board's and the Federal Circuit's construction of the claims featured prominently in the ultimate determination that the claims failed patent-eligibility. It is apparent that features of the invention that may have led to a different outcome were absent from the claims and not expressly defined in the specification, such as how to implement certain functionality that was unknown or otherwise not routinely applied in the methods. Thus, patent applications directed to new methods and systems for precision medicine that could be construed as an abstract idea should clearly identify inventive features that go beyond pointing to conventional systems and functions merely applied by use of a computer. These may involve disclosing and claiming special hardware components and specific instructions regarding how to use that hardware unique to the invention. These may also involve disclosing and claiming specific features and details of method steps to achieve the desired functionality.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.