Posts Tagged: "patent eligibility"

On January 11, Brian Pomper, Executive Director of the Innovation Alliance, sent a letter to President-elect Biden and Vice President-elect Harris urging support for strong patent rights and outlining Innovation Alliance’s recommendations with respect to the U.S. patent system and the U.S. Patent and Trademark Office (USPTO). The letter emphasized the importance of a strong patent system that incentivizes technological advancement in order to effectively compete with China and explained that the current system is in distress and strong leadership is needed.  

As a Patent Agent, the work product coming out of the U.S. Patent and Trademark Office (USPTO) seemed random to me. This article shares what I learned as a USPTO Patent Examiner that lifted the veil and shed light on that randomness. As a Patent Examiner I learned a powerful lesson: the approach that a Patent Examiner takes in interpreting claim language is learned by “on the job” training while working with USPTO trainers and other experienced USPTO examiners. The USPTO does not give new Patent Examiners detailed training on how to interpret claim language. Understanding the unique lens through which each examiner is viewing the application and prior art is critical to working effectively with Patent Examiners. Some Examiners interpret very broadly and allow fewer applications, while other examiners interpret more narrowly and allow more applications.   

Since the Supreme Court’s Alice decision in 2014, inventors have faced extra hurdles trying to protect their software-related inventions with patents. A chief obstacle has been satisfying the two-part test for eligibility under Section 101 set forth in Alice and Mayo. To meet this test, claimed subject matter must not be directed to a judicial exception, such as an abstract idea, (Step One), and if it is, must add “significantly more” to provide an inventive concept (Step Two)…. Theodore Rand reported in IPWatchdog last week, a disturbing but not surprising trend. Rand found that, in 2020, 81% of software-related patents on appeal for subject matter eligibility in decided precedential cases (22 of 27) were found invalid. But in three cases, software-related patents were found drawn to eligible subject matter for patent purposes. Id. In each of the three cases, the appeals court pointed to aspects of the patent specifications themselves. Looking more closely at the representative claims and court’s comments with respect to the corresponding patent specification is illuminating. In particular, the court looked to the specifications for evidence of performance improvements over conventional systems, description of a technical problem/solution, and technological advantages.

Judge Kimberly Moore, in a comprehensive and insightful opinion dissenting from the denial of the petition for rehearing en banc in Athena Diagnostics, Inc. v. Mayo Collaborative Servs., 927 F.3d 1333 (2019), emphasized that the lack of clarity in Section 101 jurisprudence is one of the most critical issues in patent law. Sensing no interest by her colleagues in crafting an opinion with sufficient common denominators to provide instructions to trial judges on how to navigate the cross-currents created by Federal Circuit decisions post-Mayo/Alice, Judge Moore advised litigants: “Your only hope lies with the Supreme Court or Congress.” Id. at 1363. Not now. Several months after Athena, the USPTO took the initiative to issue a guidance document “October 2019 Update: Subject Matter Eligibility,” in response to requests by numerous stakeholders for more clarity and predictability. Consequently, in light of well-established Supreme Court precedent in administrative law, there is every reason for the Federal Circuit to now adopt the analysis of these Guidelines in future Section 101 cases.

In Part I of this article, I explained that the CAFC invalidated almost every software patent on appeal for eligibility in 2020 and recapped the first 13 such cases of the year. Despite the many software eligibility cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework. Below is a recap of the remaining 14 cases considered by the CAFC in 2020 with respect to software patent eligibility.

Last year was an active one at the United States Court of Appeals for the Federal Circuit (CAFC) for software eligibility. It also was a brutal year for patent owners, as the CAFC invalidated almost every software patent on appeal for eligibility. Despite the many cases decided last year, there is still some uncertainty about what passes muster under the Alice two-step framework promulgated by the Supreme Court in 2014. But one thing that has become increasingly clear is that the CAFC wants to see how a particular result is achieved or how a problem is solved. This desire for a “how” or rule set from the claims creates an evident tension with the traditional notion that patent claims should recite structure, not functional language. These recent CAFC cases have also made it clear that courts will look to the specification for implementation details, even if these details do not emerge in the claims. This analysis has previously been reserved for the written description requirement under Section 112 but found its way into the Alice two-step.

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.

American Axle & Manufacturing, Inc. filed a petition for certiorari with the U.S. Supreme Court on December 28, 2020, asking it to review the Federal Circuit’s July 31, 2020 modified judgment and October 2019 panel opinion in a closely-watched Section 101 patent eligibility case involving driveshaft automotive technology. The Federal Circuit has been sharply divided by the issues presented, leading Judge Moore to refer to the original panel’s analysis as “validity goulash” and to state that the “majority’s Nothing More test, like the great American work The Raven from which it is surely borrowing, will, as in the poem, lead to insanity.”

In 2015, Randy dela Fuente launched Snapizzi. Randy had bet big, putting his career, savings, and company at risk. Later, Randy brought in a business partner, Chris Scoones, who cleaned out his savings and mortgaged his house. But they believed in the patent. On the patent’s government-issued cover, it stated that Snapizzi would have the “right to exclude others from making, using, offering for sale, or selling” the invention. This meant that U.S. Patent No. 8,794,506 would protect their company from infringers and give them enough time to carve a toehold in the market. That patent cover also said that the patent was “granted under law”, which meant that it was a legally granted and presumed valid property right. In America, we are a nation of laws. Randy trusted the U.S. government, and this made the burden of huge risk much more tolerable. But in December 2019, a court held that the claims are all ineligible for patenting because they are “abstract ideas”.

If you’re looking for some positive patent news from 2020, count the heightened civic awareness of our intellectual-property/innovation policies, as a result of the global pandemic, as a silver lining. But our present task is to report on the 2020 highlights from the Federal Circuit; unfortunately, it’s all downhill from here. If 2019 had Section 101 law as its defining issue, given the Federal Circuit and
Supreme Court’s slate of rulings and non-rulings, 2020 only seemed to make the Section101 exclusions even broader. The capstone was AAM, Inc. v. Neapco Holdings LLC, 966 F.3d 1347 (Fed. Cir. 2020), the Federal Circuit’s denial of en-banc consideration (again) of Section 101 rulings that, all judicial protests aside, seemed to plainly expand a reviewing court’s power under Section 101 (again). And in ways many would’ve thought unimaginable just six-to-eight years ago, when Mayo-Alice emerged from the Supreme Court with only “inventive-concept” tests ringing about. Neapco’s panel ruling in the fall of 2019 was the proverbial shot across the Section112 bow.

On December 14, the United States Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the United States District Court for the Central District of California in Adaptive Streaming Inc. v. Netflix, Inc., holding that that claims of Adaptive Streaming Inc.’s patent were invalid under 35 U.S.C. § 101. In particular, the CAFC agreed with the district court that the claims of the patent in suit were directed to the abstract idea of “collecting information and transcoding it into multiple formats” and that the claims did not incorporate anything more that would transform the claimed subject matter into an eligible application of the abstract idea.

The Senate Judiciary Committee’s Subcommittee on Intellectual Property Chair, Senator Thom Tillis (R-NC), who was re-elected to a second term this November with about 49% of the vote, last week released the Subcommittee’s 116th Congressional Report. According to the report, Tillis held over 90 stakeholder meetings in 2019 and over 50 meetings in 2020, when discussions had to be moved to a virtual format due to the COVID-19 pandemic. Tillis has also held 17 Senate hearings since January 2019 on topics ranging from USPTO oversight to reform of the Digital Millennium Copyright Act (DMCA) and led or co-sponsored 11 intellectual property (IP)-related bills.   

On November 25, the Federal Reserve Bank of Atlanta (Bank of Atlanta) filed a brief in opposition in response to a petition for a writ of certiorari filed by Bozeman Financial LLC (Bozeman) with the U.S. Supreme Court on September 8. Bozeman’s petition followed a decision of the U.S. Court of Appeals for the Federal Circuit (CAFC), which affirmed a decision of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) holding that the PTAB correctly determined claims 21–24 of U.S. Patent No. 6,754,640 (’640 patent) and claims 1-20 of U.S. Patent 8,768,840 (’840 patent), both owned by Bozeman Financial LLC (Bozeman), to be directed to patent ineligible subject matter under 35 U.S.C. § 101. In reaching the decision, the CAFC first determined the appellees, all 12 of the United States Federal Reserve Banks, were considered “persons” under the America Invents Act (AIA) and, therefore, eligible to petition for post-issuance review under the AIA. In its brief in opposition, the Bank of Atlanta asserted that the CAFC “correctly concluded that the Reserve Banks should not be viewed as part of the sovereign for purposes of the AIA’s post-grant review provisions” and that the Supreme Court’s review is not warranted.

On October 13, 2020, Cybergenetics filed a notice of appeal to the Federal Circuit from a decision of the Northern District of Ohio, Eastern Division, that held the patent claims asserted by Cybergenetics invalid under 35 U.S.C. 101, and granting the defendant’s Rule 12(b)(6) motion to dismiss.  Cybergenetics’ brief on appeal is due December 28, 2020.

On November 16, the U.S. Supreme Court denied petitions for certiorari in two cases from the Federal Circuit: IYM Technologies LLC v. RPX Corporation and Advanced Micro Devices, Inc. and WhitServe LLC v. Donuts Inc. IYM asked the Supreme Court to grant review “to determine whether the Arthrex decision applies to all appeals that were pending when [the Arthrex decision] issued.” In the WhitServe petition, WhitServe asserted that a determination of patent ineligibility “necessitates impermissible fact-weighing at the pleading stage and eviscerates the statutory presumption of validity.”