December 19, 2016
Law360
The debate over whether computer-implemented inventions should be patent eligible has raged on for many decades. The U.S. Supreme Court first opened the door to patent protection for computer-implemented inventions in the landmark case of Diamond v. Diehr, 450 U.S. 175 (1981). In that case, the court found that the use of a mathematical formula or computer program—in an otherwise patent eligible machine or process—did not render the invention as a whole patent ineligible. In making its holding, the Supreme Court distinguished from its earlier decisions in Gottschalk v. Benson, 409 U.S. 63 (1972), and Parker v. Flook, 437 U.S. 584 (1978). The court noted that a claim to a mathematical formula (as in Benson and Flook) is not patent eligible, but a claim to a patent-eligible machine or process that simply includes a mathematical formula (as in Diehr) is not per se patent ineligible.
Across these cases, the court was concerned with the question of preemption. The court noted that while the claims in Benson "would wholly pre-empt the mathematical formula [for converting BCD numerals to pure binary numerals] and in practical effect would be a patent on the algorithm itself" (Benson, 409 U.S. at 7172), the claims in Diehr sought "only to foreclose from others the use of that equation in conjunction with all of the other steps in [the] claimed process” for curing rubber (Diehr, 450 U.S. at 187). That is, the claimed invention in Diehr did not "seek to pre-empt the use of" a mathematical equation itself.
In the more recent Supreme Court cases directed to subject matter eligibility of computer-implemented inventions, the Supreme Court once again was concerned with the question of preemption. In Bilski v. Kappos, 130 S.Ct. 3218 (2010), the Supreme Court decided that the "machine-or-transformation" test used by the U.S. Patent and Trademark Office and the Federal Circuit was not the "sole test" for determining patent eligibility of computer-implemented inventions. Relying on past precedent, the court found that Bilski’s claims were drawn to a patent ineligible abstract idea, "just like the algorithms at issue in Benson and Flook." Bilski, 130 S.Ct. at 3231. In particular, the court pointed out that to allow "petitioners to patent risk hedging would pre-empt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea." Id. Similarly, in Alice Corp. Pty. Ltd. v. CLS Bank Intern., the Supreme Court explained that "the concern that drives [the Section 101] exclusionary principle [is] one of preemption." 134 S.Ct. 2347, 2354 (2013). The Court further noted that simply implementing an abstract idea on a generic computer cannot confer patent eligibility because it does not overcome the concerns of preemption of the abstract idea itself. Id. at 2358. Thus, preemption seems to have been a prime consideration for the Supreme Court in deciding patent eligibility of the claims in both Bilski and Alice.
Since the Alice decision, different panels of the Federal Circuit have handled patent eligibility of computer-implemented inventions in different ways—often applying divergent approaches and rationale. While some Federal Circuit panels have relied on preemption as a guidepost for determining patent ineligibility, others have overlooked it completely, or have given it short shrift. There is also confusion on whether preemption is a consideration under step one or step two of the Mayo/Alice test for patent eligibility, which was established by the Supreme Court in Mayo Collaborative v. Prometheus Labs., 132 S.Ct. 1289 (2012) and further confirmed in Alice.
For example, in Ariosa Diagnostics Inc. v. Sequenom Inc., the Federal Circuit rejected the patentee’s argument that the claims were not patent ineligible because there were alternative uses of cell-free fetal DNA outside the scope of the claims. 788 F.3d 1371, 1376 (Fed. Cir. 2015). Specifically, the court explained that "[w]hile preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility. … Where a patent’s claims are deemed only to disclose patent ineligible subject matter under the Mayo framework, … preemption concerns are fully addressed and made moot." Id.
Similarly, many Federal Circuit decisions related to computer technology do not consider lack of preemption as conferring patent eligibility. See, e.g., OIP Technologies Inc. v. Amazon.com Inc., 788 F.3d 1359, 1364-65 (Fed. Cir. 2015) (finding that the claims do not become "any less abstract" due to lack of preemption); Fairwarning IP LLC, v. Iatric Systems Inc., No. 2015-1985, slip op., *14 (Fed. Cir. Oct. 11, 2016) (finding that "the absence of complete preemption does not demonstrate patent eligibility."). Some other Federal Circuit decisions do not explicitly invoke preemption at all in their patent eligibility analysis. See, e.g., Enfish LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). There, the court found that the claims at issue were not directed to an abstract idea under step one of the Mayo/Alice test, because the claimed "self-referential table" is a "specific type of data structure" designed to improve computer functionality. Id. at 1339. While the court did not directly mention preemption, the court’s emphasis on a "specific" implementation suggests that the court may have indirectly taken preemption into consideration because claims directed to a "specific" type of database would not monopolize or tie up all applications of computer databases.
A few recent Federal Circuit decisions, however, seem to be revisiting preemption as a firm guidepost for patent eligibility. See, e.g., DDR Holdings LLC v. Hotels.Com LP, 773 F.3d 1245 (Fed. Cir. 2014), BASCOM Global Internet Servs. Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016), McRO Inc. v. Bandai Namco Games Am. Inc., No. 2015-1080 (Fed. Cir. Sep. 13, 2016), and Amdoc (Israel) Ltd. v. Openet Telecom Inc., No. 15-1180 (Fed. Cir. Nov. 1, 2016).
In DDR Holdings, the court found the claims at issue were directed to an abstract idea under step one of the Mayo/Alice analysis, although the court noted that defining that abstract idea was "not as straightforward" as in some other cases. DDR Holdings, 773 F.3d at 1257. The court then found that the claims satisfied step two of the Mayo/Alice test, and therefore were patent eligible, because the claims recite a "specific way" of automating the creation of composite websites, which provides the "additional features" that ensure the claims do not monopolize or preempt the abstract idea itself. Id. at 1259.
Similarly, in BASCOM, while the court found in step one of the Mayo/Alice test that the claims were directed to an abstract idea of filtering content, it determined that the claims passed muster under step two because they do not preempt all uses of the abstract idea. BASCOM, 827 F.3d at 1349-1350. That is, the claims recite "a specific, discrete implementation of the abstract idea of filtering content." Id. at 1350.
And in Amdocs, the Federal Circuit likened Amdoc’s claims to the claims at issue in DDR Holdings and BASCOM, and found in step two of the Mayo/Alice test that Amdoc’s claims, which are directed to processing network accounting information, describe a specific, unconventional technological solution to a technological problem, and are narrowly drawn to withstand preemption concerns. See, e.g., Amdocs, slip op. at **24, 25, 28, 34.
Conversely, in McRO, the court applied preemption in step one of the Mayo/Alice test to find that the claims at issue were not directed to an abstract idea. In particular, the claims in McRO were found to be patent eligible because the "specific" set of rules recited in the claims prevented broad preemption of all means of achieving automated lip-synchronization of 3-D characters. McRO, slip op., at *25. The court likened the "directed to" inquiry in step one to a determination of the "focus" of the claims, emphasizing that claims should be analyzed with respect to whether they "focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea." Id. at *23. Further, the court explained that preemption justifies exclusion of certain subject matter from patent protection, stating in particular that "[t]he concern underlying the exceptions to § 101 is not tangibility, but preemption." Id. at *25.
One principal takeaway of these recent Federal Circuit cases—e.g., DDR Holdings, BASCOM, Amdocs and McRO—is that the Federal Circuit is concentrating more on the issue of preemption in its patent eligibility analysis, be it in step one or step two of the Mayo/Alice framework. The Federal Circuit’s focus on the underlying concern of preemption provides a useful roadmap for patent applicants/patentees attempting to overcome a Section 101 challenge. If they can demonstrate that the claims at issue are directed to a specific implementation that does not tie up all uses of the generic concept, the absence of preemption can be a useful argument.
Moreover, applicants should consider preemption while drafting applications. For computer-implemented inventions in particular, applicants should draft claims and specifications articulating the specific implementations or specific improvements of the computer functionality. Later on, if it is ever purported that the claimed invention includes an abstract idea, the applicant could have a lack-of-preemption argument that will help it withstand the Section 101 challenge.
Originally printed in Law360 (www.law360.com). Reprinted with permission. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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