Federal Circuit Affirms District Court Ineligibility Decision under Alice

On December 29, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed a district court’s decision dismissing Simio’s patent infringement action against FlexSim Software Products (FlexSim) and finding Simio’s claims patent ineligible under 35 U.S.C. § 101 (Simio v. FlexSim Software Products, Inc.). The CAFC also affirmed the district court’s dismissal of Simio’s motion for leave to file an amended complaint on the grounds of futility and, alternatively, on the ground that Simio failed to show good cause for its untimely motion for leave to amend.

District Court Dismissal

Simio filed a suit against FlexSim in the United States District Court for the District of Utah, alleging infringement of U.S. Patent No. 8,156,468 (the ’468 patent). FlexSim filed a motion to dismiss the complaint for failing to state a claim upon which relief could be granted because the claims of the ‘468 were ineligible for patenting under 35 U.S.C. § 101. The district court granted FlexSim’s motion to dismiss, concluding that (1) the claims were directed to “the decades-old computer programming practice of substituting text[-]based coding with graphical processing,” which the district court determined was an ineligible abstract idea and (2) “considering the claim elements both individually and as an ordered combination, FlexSim ‘met its burden of showing no inventive concept or alteration of computer functionality sufficient to transform the system into a patent-eligible application.’”

Simio moved for reconsideration and leave to file a proposed amended complaint (PAC). The district court denied the motion because the “amendment would be futile because the new factual allegations [in the PAC were] inadequate to remedy the ’468 patent on the merits.” Although FlexSim argued that Simio’s leave to amend should be denied for being untimely, the district court did not reach that issue. Simio appealed to the CAFC.

Key Advance Over the Prior Art

In addressing step one of Alice’s two-step framework for determining patent eligibility, the CAFC explained that it considers “what the patent asserts to be the focus of the claimed advance over the prior art,” in order to determine whether the claim’s “character as a whole” is directed to ineligible subject matter. The CAFC noted that the ’468 patent “showcases its key advance,” which was “using graphics instead of programming to create object-oriented simulations.” The CAFC noted that the ’468 patent acknowledges that “using graphical processes to simplify simulation building has been done since the 1980s and 1990s.” The CAFC stated that “[s]imply applying the already widespread practice of using graphics instead of programming to the environment of object-oriented simulations is no more than an abstract idea.” Thus, the court concluded that the claim of the ‘468 patent was directed to the abstract idea of using graphics instead of programming to create object-oriented simulations.

The CAFC rejected Simio’s argument that the claim was not directed to an abstract idea because it “present[ed] improvements to computer-implemented simulation, resulting in improvements in the computers’ capabilities.” The opinion explained that Simio failed to show how claim 1 was directed to improving a computer’s functionality. In response to Simio’s argument that the claim improved on the functionality of prior systems through the use “graphical or process modeling flowcharts with no programming code required,” the CAFC noted that “improving a user’s experience while using a computer application is not, without more, sufficient to render the claims directed to an improvement in computer functionality.” Citing Customedia Techs., LLC v. Dish Network Corp. The CAFC also rejected Simio’s argument that claim 1 improves a computer’s functionality “with improved processing speed.” Again citing Customedia, the CAFC stated that “‘claiming the improved speed or efficiency inherent with applying the abstract idea on a computer’ [is] insufficient to render the claims patent eligible as an improvement to computer functionality.”

Inventive Concept

With respect to Alice at step two, the CAFC considered “the elements of [the] claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application.” Simio acknowledged that “implementing the executable process’s functionality through programming” was conventional, but it argued that “doing so with graphics in a simulation provides the inventive concept necessary to confer eligibility.” The CAFC explained that Simio was improperly relying on the abstract idea to “supply the inventive concept that renders the invention ‘significantly more’ than that [abstract idea].”

In addition, Simio argued that the executable-process limitation was novel. The CAFC reasoned that the claim was “directed to the idea of using graphics instead of programming to create object-oriented simulations—maybe a new idea, but still an abstract one—and lacking any inventive concept, any meaningful application of this idea, sufficient to save the claim’s eligibility.” Thus, the CAFC dismissed the district court’s dismissal for failure to state a claim.

Simio’s Leave to Amend

The CAFC affirmed the district court’s futility-based grounds for denial and, alternatively, the ground that Simio failed to show good cause for its untimely motion for leave to amend. The CAFC rejected both of Simio’s arguments: 1) that the proposed amended complaint’s new allegations were sufficient to preclude dismissal for ineligibility, and 2) that the district court erred by finding ineligibility without first conducting claim construction. Thus, the court affirmed the district court’s denial of leave to amend the complaint.