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New Patent Eligibility Bill May Impact What Subject Matter Is Patentable

On August 2, 2022, Senator Thom Tillis (R-NC) introduced the Patent Eligibility Restoration Act of 2022. Senator Tillis’s bill addresses patent subject matter eligibility by modifying 35 U.S.C. § 101 to mitigate areas in which it has been considered problematic in view of recent judicial decisions/exceptions construing it while retaining its core features. For some in the biotechnology space, “problematic” Supreme Court decisions have included May Collaborative Services (2012), Myriad Genetics (2013), Alice Corp. (2014) and their Federal Circuit progeny.

The core features for eligibility will remain in the statute as: “[w]hoever invents or discovers any useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, may obtain a patent therefore.”

The bill provides express exceptions, including:

  • A mathematical formula, apart from useful invention or discovery
  • An unmodified human gene, as that gene exists in the human body
  • An unmodified natural material, as that material exists in nature.

However, the bill further states that genes or natural material that are “purified, enriched, or otherwise altered by human activity, or otherwise employed in a useful invention or discovery,” would not be considered unmodified and would be eligible for patents. One of the goals of the bill is to override case law that has made it  difficult to receive patents on diagnostics inventions and otherwise blurred the line between what inventions are considered abstract.

Processes that are excluded from eligibility under the bill include:

  • Nontechnological economic, financial, business, social, cultural or artistic processes
  • Mental processes performed solely in the human mind
  • Processes occurring in nature wholly independent of, and prior to, any human activity.

Under current law, the question of what constitutes a technological solution that would render an otherwise abstract idea patent eligible is a hotly contested one often determined on a case-by-case basis. The European Patent Convention’s eligibility exclusions include presentations of information and mathematical methods. However, if there is a technical use applied to those types of inventions, they are patent eligible.

The bill was reportedly drafted following three years of work by Senator Tillis’ team, including a series of US Senate hearings in 2019 with Senator Chris Coons (D-DE) and meetings with an array of industries. Updates will be posted to the IP Update blog as legislative developments warrant.

Practice Note: Readers are encouraged to check out the IP Update report that discusses a recent presentation by the PTO that shares recommendations for dealing with § 101 rejections during prosecution, which can be found here.




USPTO Conducting Patent Eligibility Jurisprudence Study

At the request of Senators Thom Tillis (R-NC), Marie Hirono (D-HI), Tom Cotton (R-AR) and Chris Coons (D-DE), the US Patent & Trademark Office (USPTO) is undertaking a study on the current state of patent eligibility jurisprudence in the United States and how the current jurisprudence has impacted investment and innovation, particularly in critical technologies like quantum computing, artificial intelligence, precision medicine, diagnostic methods and pharmaceutical treatments. On July 9, 2021, the USPTO issued a Federal Register Notice seeking public input on these matters to assist in preparing the study. The deadline for submitting written comments is September 7, 2021.

The Federal Register Notice included 13 concerns on which comments were requested:

  1. Explain how the current state of patent eligibility jurisprudence affects the conduct of business in your technology areas, and identify your technology areas.
  2. Explain what impacts you have experienced as a result of the current state of patent eligibility jurisprudence in the United States. Include impacts on as many of the following areas as you can, identifying concrete examples and supporting facts when possible:
    1. patent prosecution strategy and portfolio management;
    2. patent enforcement and litigation;
    3. patent counseling and opinions;
    4. research and development;
    5. employment;
    6. procurement;
    7. marketing;
    8. ability to obtain financing from investors or financial institutions;
    9. investment strategy;
    10. licensing of patents and patent applications;
    11. product development;
    12. sales, including downstream and upstream sales;
    13. innovation and
    14. competition.
  3. Explain how the current state of patent eligibility jurisprudence in the United States impacts particular technological fields, including investment and innovation in any of the following technological areas:
    1. quantum computing;
    2. artificial intelligence;
    3. precision medicine;
    4. diagnostic methods;
    5. pharmaceutical treatments and
    6. other computer-related inventions (e.g., software, business methods, computer security, databases and data structures, computer networking, and graphical user interfaces).
  4. Explain how your experiences with the application of subject matter eligibility requirements in other jurisdictions, including China, Japan, Korea, and Europe, differ from your experiences in the United States.
  5. Identify instances where you have been denied patent protection for an invention in the United States solely on the basis of patent subject matter ineligibility, but obtained protection for the same invention in a foreign jurisdiction, or vice versa. Provide specific examples, such as the technologies and jurisdictions involved, and the reason the invention was held ineligible in the United States or other jurisdiction.
  6. Explain whether the state of patent eligibility jurisprudence in the United States has caused you to modify or shift investment, research and development activities, or jobs from the United States to other jurisdictions, or to the United States from other jurisdictions. Identify the relevant modifications and their associated impacts.
  7. Explain whether the state of patent eligibility jurisprudence in the United States has caused you to change business strategies for protecting your intellectual property (e.g., shifting from patents to trade secrets, or vice versa). Identify the changes and their associated impacts.
  8. Explain whether you have changed your behavior with regard to filing, purchasing, licensing, selling, or maintaining patent applications and patents in the United States as a result of [...]

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Diehr Alice, Yu are Superimposing Novelty onto Patent Eligibility. Love, Newman.

The US Court of Appeals for the Federal Circuit affirmed the district court’s grant of a Rule 12(b)(6) motion to dismiss on the basis that, under the two-step Alice analysis, the patent claims—directed to a digital camera—were directed to ineligible subject matter under 35 U.S.C. § 101. Yu, et al. v. Apple Inc., et al., Case Nos. 20-1760; -1803 (Fed. Cir. June 11, 2021) (Prost, J.) (Newman, J., dissenting)

The patent claim under consideration recited an “improved digital camera” that has two lenses, two image sensors, an analog-to-digital converter, a memory and a digital image processor for “producing a resultant digital image from said first digital image enhanced with said second digital image.” Yu conceded that “the idea and practice of using multiple pictures to enhance each other has been known by photographers for over a century” and that the components recited in the claim “are themselves generic and conventional.”

Applying the Supreme Court’s two-step Alice v. CLS Bank test for determining patent eligible subject matter, the Federal Circuit determined at step one that the claim was “directed to the abstract idea of taking two pictures . . . and using one picture to enhance the other in some way.” At step two, the Court held that the claim failed to otherwise define a patent eligible invention because the digital camera “is recited at a high level of generality and merely invokes well-understood, routine, conventional components to apply the abstract idea of [using one picture to enhance the other in some way].” The Court rejected Yu’s attempts to use portions of the patent’s specification to support eligibility, explaining that the eligibility analysis is limited to the literal recitations of the asserted claims.

Then, along came Judge Pauline Newman. With a chainsaw.

In dissent, Judge Newman argued that the majority was improperly enlarging the § 101 analysis to include other “substantive requirements of patentability.” Judge Newman emphasized (twice) that the claim literally recited an electromechanical camera, not an abstract idea. In her view, the camera recited in the claim met the requirements of § 101 as a new and useful machine, without regard to whether the claimed camera also met the novelty requirements of §§ 102 and 103. Referring to the Supreme Court’s 1981 holding in Diamond v. Diehr, Judge Newman wrote that “[i]n contravention of [Diehr‘s] explicit distinction between Section 101 and Section 102, the majority now holds that the [claimed] camera is an abstract idea because the camera’s components were well-known and conventional and perform only their basic functions.” Judge Newman further proclaimed that “the principle that the majority today invokes was long ago discarded.”

Judge Newman also admonished the majority for the destabilizing effects that similar holdings have already had on US patent policy. She noted that “[i]n the current state of Section 101 jurisprudence, inconsistency and unpredictability of adjudication have destabilized technologic development in important fields of commerce,” and that “[t]he fresh uncertainties engendered by the majority’s revision of Section 101 are contrary to the statute and [...]

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Coons and Tillis Introduce Two Bills Intended to Change Patent Landscape

In late June 2023, Senators Chris Coons (D-DE) and Thom Tillis (R-NC) introduced two bills in Congress that, if enacted, would change the patent adjudication landscape:

The PREVAIL Act is essentially a reintroduction of the previously unsuccessful STRONGER Patents Act of 2019 bill and would change fundamental aspects of how the Board operates. Under current practice, the Board judges who rules on institution and also decides the outcome of an instituted proceeding. Under the PREVAIL Act, institution decisions would be made by a separate set of judges from those that render a decision on a petition’s merits. Through proposed changes to the initiation and estoppel provisions, a patent challenger could bring its attack on patent validity in either the district court or the Board, but not both. And as part of the harmonization of district court and Board proceedings, the PREVAIL Act would adopt the “clear and convincing” standard for Board review and codify existing Board practice of applying the same claim construction standard as district courts apply.

The PREVAIL Act would also change who can bring issues to the Board by imposing standing and revised real-party-in-interest requirements. An IPR petitioner would have to establish standing equivalent to that required for a district court declaratory judgment action. Moreover, anyone who financially contributes to an IPR would be deemed a real party in interest to avoid multiple petitions backed by the same entity. To reduce the multiplicity of proceedings, the PREVAIL Act would establish a presumption against a joinder for time-barred petitions. The PREVAIL Act also includes several provisions directed to the independence and transparency of the Board’s decision-making, including establishing a code of conduct and requiring recordation of the Director’s actions that affect Board proceedings.

Turning to subject matter eligibility, the Patent Eligibility Restoration Act would overrule Supreme Court decisions importing a judicial exception to Section 101 and would codify many of the existing categories of ineligible subject matter, including mathematical formulae; substantially economic, financial, social, cultural and artistic practices (in other words, fundamental human activity); natural processes and products made independent of human activity; and mental processes. The Patent Eligibility Restoration Act specifically would authorize early resolution and limited discovery on Section 101 ineligibility.

Practice Note: Although both acts have been introduced before without much success, Congress’s present focus on technology (such as artificial intelligence) may serve to propel one or both bills forward. Of course, it remains to be seen whether Congress has an appetite for modifying patent law, particularly in the lead-up to an election year.




Branding Function Patent Yet Another 1[01] to Bite the Dust

Addressing the patentability of claims directed to digital image branding functions, the US Court of Appeals for the Federal Circuit affirmed a district court’s determination that claims across three related patents were invalid under 35 U.S.C. § 101 for lacking patent-eligible subject matter. Sanderling Mgmt. Ltd. v. Snap Inc., Case No. 21-2173 (Fed. Cir. Apr. 12, 2023) (Chen, Cunningham, Stark, JJ.)

Sanderling owns three patents, each titled “Dynamic Promotional Layout Management and Distribution Rules.”  The three patents share a common specification and are generally directed to a method using distribution rules to load digital imaging branding functions to users when certain conditions are met. The specification explains that a distribution rule is “a rule used in determining how to target a group of end users, for instance, a rule that determines that only a group of end users having certain characteristics and/or match a certain requirement.”

Sanderling asserted each of the three patents against Snap in the Northern District of Illinois. Snap moved to transfer venue to the Central District of California and to dismiss the case under Fed. R. Civ. P. 12(b)(6) for failure to state a claim based on the allegation that the asserted patents’ claimed ineligible subject matter under § 101. After the case was transferred, the Central District of California found the claims patent ineligible and granted Snap’s motion to dismiss. Sanderling appealed.

The Federal Circuit reviewed the decision by engaging in the two-step Alice framework for subject matter eligibility. Under step one, the Court determined that the claims were directed to the abstract idea of providing information—in this case, a processing function—based on meeting a condition (e.g., matching a GPS location indication with a geographic location). The Court explained that for computer-related inventions, the relevant question is whether the claims are directed to an improvement to computer functionality or to an abstract idea. The Court found that the claims in issue were not directed to an improvement in computer functionality, but instead to the use of computers as a tool—specifically, a tool to identify when a condition is met and then to distribute information based on satisfaction of that condition.

Even if directed to an abstract idea, patent claims may still be eligible under step two of the Alice framework if there are additional features that constitute an inventive concept. The Federal Circuit, however, found that the claims failed this step also. The Court explained that if a claim’s only inventive concept is the application of an abstract idea using conventional and well-understood techniques, the claim has not been transformed into a patent-eligible application of an abstract idea. The distribution rule of the asserted claims was just that: the application of the abstract idea using common computer components. Accordingly, the Court affirmed the district court’s decision that the patent claims were invalid under § 101.

Practice Note: On appeal, Sanderling argued that the district court erred at step one of the Alice analyses by failing to construe certain claim terms that were allegedly crucial to the determination. [...]

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The Alice Eligibility Two-Step Dance Continues

The US Court of Appeals for the Federal Circuit affirmed a district court’s dismissal of a Fed. R. Civ. P. 12(b)(6) motion, holding that patent claims directed to abstract ideas and lacking inventive steps that transform abstract ideas into patent-eligible inventions fail the Alice two-step test and are not patent eligible under 35 U.S.C. § 101. Hawk Tech. Sys., LLC v. Castle Retail, LLC, Case No. 22-1222 (Fed. Cir. Feb. 17, 2023) (Reyna, Hughes, Cunningham, JJ.)

35 U.S.C. § 101 states that laws of nature, natural phenomena and abstract ideas are not patentable. The Supreme Court of the United States in Alice v. CLS Bank Int’l (2014) articulated a two-step test for examining patent eligibility: a patent claim falls outside § 101 if it is directed to a patent-ineligible concept such as an abstract idea and lacks elements sufficient to transform the claim into a patent-eligible application.

Hawk Technology sued Castle Retail alleging infringement of its patent directed to security surveillance video operations in Castle Retail’s grocery stores. The patent relates to a method of viewing multiple simultaneously displayed and stored video images on a remote viewing device of a video surveillance system using result-based functional language. Castle Retail moved to dismiss on the basis that the claims were not patent eligible under § 101. After conducting a technology briefing, the district court granted the motion. The district court ruled that the claims were abstract because surveillance monitoring is a common business practice and the claims recited little more than taking video surveillance and digitizing it for display and storage in a conventional computer system, and the claims did not limit the abstract idea to a new technological improvement in video storage/display that could transform the abstract idea into a patent-eligible invention. Hawk Technology appealed.

The Federal Circuit, reviewing de novo, affirmed. Addressing Alice step one, the Court found that the patent’s required functional results of receiving/digitizing video images, converting images to selected format and storing/displaying/transmitting the images were similar to claims that the Court previously ruled as abstract. The results-oriented claim language failed to concretely recite how the claimed invention improved the functionality of video surveillance systems and was therefore abstract. Regarding Alice step two, the Court analyzed the claim elements, both individually and as an ordered combination in light of the specification, for transformative elements. The Court explained that although the claims recited the purported inventive solution and referenced specific tools/parameters, they neither showed how monitoring and storage was improved nor required anything other than off-the-shelf, conventional computer, network and display technology for gathering, sending and presenting the specified information.

Procedurally, the Federal Circuit found that the motion to dismiss was not decided prematurely because the technology briefing was purely a procedural step conducted in each patent case and there was no evidence that the district court’s decision hinged on new facts constituting matters beyond the pleadings. Hawk had argued that because the district court considered Castle’s testimony and evidence, it was required to convert the [...]

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Does Not Compute: Faster Processes Aren’t Enough for Subject Matter Eligibility

In yet another opinion addressing subject matter eligibility and application of the Supreme Court’s Alice decision, the US Court of Appeals for the Federal Circuit found claims directed to graphical displays and user interfaces subject matter ineligible as directed to abstract ideas. IBM v. Zillow Group, Inc., Case No. 21-2350 (Fed. Cir. Oct. 13, 2022) (Reyna, Hughes, Stoll, JJ.) (Stoll, J., dissenting in part).

IBM sued Zillow for allegedly infringing several patents related to graphical display technology. The district court granted Zillow’s motion for judgment on the pleadings that sought a ruling that two of the asserted patents claimed patent-ineligible subject matter under 35 U.S.C. § 101. IBM appealed.

On appeal, the Federal Circuit applied the Alice two-step analysis to determine whether the claims at issue were directed to a patent-ineligible concept, such as an abstract idea, and if so, whether additional claim elements (considering each element both individually and as an ordered combination) transformed the nature of the claim into a patent-eligible application. As discussed in the Supreme Court Alice and Mayo decisions, the second step is “a search for an ‘inventive concept’—i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’”

The representative claim of the first patent was directed to a method for coordinated geospatial and list-based mapping, and the method steps recited viewing elements having “geospatial characteristics” in a given viewing area of a map space and displaying a list of the elements in that space. The user then draws a selected area within the map space, having elements that may be inside or outside of the selected area. The elements having the geospatial characteristics within the selection area are selected and those outside the selected area are deselected. The map display and the list are then synchronized and concurrently updated to reflect what has been selected and deselected.

The district court concluded that “the patent was directed to the abstract idea of responding to a user’s selection of a portion of a displayed map by simultaneously updating the map and a co-displayed list of items on the map,” reasoning that the claimed method could be performed manually, for example, by putting a transparent overlay on a printed map, drawing on it with a marker, and then blocking off the “unselected area” of the map and corresponding list items with opaque paper cut to appropriate sizes. To choose a different “selection area,” the user would erase the prior markings, remove the paper and start over. The district court noted that “alterations to hardcopy materials were made or auditioned in this manner” long before computers, and concluded that “[t]he [] patent merely contemplates automation using a computer.”

The Federal Circuit agreed that the claims failed to recite any inventive technology for improving computers as tools and were instead directed to an abstract idea for which computers were invoked merely to limit and coordinate the display of information based [...]

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PTO Can and Should Use Alice/Mayo Framework to Assess Eligibility

Addressing a challenge of the Alice/Mayo framework in the context of the Administrative Procedure Act (APA) and the Fifth Amendment’s due process clause, the US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision finding that patent claims directed to analyzing social security benefit applications were patent ineligible under 35 U.S.C. § 101. In re Killian, Case No. 21-2113 (Fed. Cir. Aug. 23, 2022) (Taranto, Clevenger, Chen, JJ.)

Jeffrey Killian filed a patent application related to a system and method for determining eligibility for social security disability insurance (SSDI) benefits through a computer network. The examiner rejected the claims under § 101, finding that they were directed to the abstract idea of “determining eligibility for social security disability insurance . . . benefits” and lacked additional elements amounting to significantly more than the abstract idea because the additional elements were simply generic recitations of generic computer functionalities. Killian appealed to the Board, which affirmed the examiner’s rejection. The Board explained that the claims were directed to the patent ineligible abstract idea of “a search algorithm for identifying people who may be eligible for SSDI benefits they are not receiving,” and that the “determining” and “selecting” limitations of the claims could be performed by the human mind and thus were an “abstract mental process.” Killian appealed.

Killian raised several arguments that generally fell into three categories:

  1. The Alice/Mayo standard is indefinite under the APA.
  2. The § 101 analysis for software violated Killian’s Fifth Amendment due process rights.
  3. Step 2 of the Alice/Mayo analysis has no basis in patent law.

Addressing the first argument, the Federal Circuit noted that the APA cannot apply to the decisions of courts because courts are not agencies. Next, the Court dismissed Killian’s argument that all § 101 decisions are void because the Alice/Mayo standard is indefinite. The Court explained that it has routinely found that mental processes are abstract ideas, including claims that were directed to data gathering, analysis and notification on generic computers. The Court found that nothing in Killian’s claims provided an inventive manner to accomplish the claimed method, and thus the § 101 rejection was entirely proper. As a final point, the Court stated that it was bound to Supreme Court precedent and only new overruling precedent would change the analysis it applied.

The Federal Circuit also rejected Killian’s due process argument. Killian argued that his due process rights were violated because he did not have an opportunity to appear in the other cases regarding patent eligibility. As an initial matter, the Court noted that no “void-for-vagueness” doctrine argument was put forward, and the doctrine requires a case-by-case analysis. The Court found that this was not a close case, as data gathering and analysis methods run afoul of established § 101 precedent. Next, the Court addressed the common law approach of not requiring “a single governing definitional context” and a comparison to previously decided cases finding it appropriate. Killian’s due process rights were found to [...]

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PTO Presentation Seeks to Clarify Subject Matter Eligibility Requirements

On August 9, 2022, the US Patent & Trademark Office (PTO) gave a public presentation, “Subject Matter Eligibility Under 35 U.S.C. § 101: USPTO Guidance and Policy.” During the presentation, the PTO indicated that its goal is to identify eligible subject matter and not reject patent applications under 35 U.S.C. § 101 where possible. However, subject matter eligibility must be determined in accordance with Supreme Court precedent as set forth in Bilski v. Kappos (2010); Mayo Collaborative Servs. v. Prometheus Labs, Inc. (2012); Association for Molecular Pathology v. Myriad Genetics, Inc. (2013); and Alice Corp. v. CLS Bank International (2014). The PTO presented several biotech examples demonstrating how subject matter ineligible claims could be redrafted to encompass eligible subject matter.

The PTO presented a detailed explanation of the two-step subject matter eligibility flowchart in MPEP § 2106 and emphasized the differences between the two prongs of Step 2A. The first prong is to evaluate whether the claim recites a judicially recognized exception to eligibility. If the claims do not recite an exception, they qualify as eligible subject matter. If the claims do recite a judicial exception, the analysis proceeds to the second prong of Step 2A, which is to evaluate whether the claims recite additional elements that integrate the exception into a practical application of the exception. If the claims do recite additional elements integrating the exception into a practical application of the exception, they qualify as eligible subject matter. If the claims do not do so, the analysis proceeds to Step 2B to determine whether the claims recite additional elements that amount to significantly more than the judicial exception.

While there is significant overlap between Step 2A prong two and Step 2B, the PTO noted that under Step 2A prong two, the additional elements may be well understood, routine, conventional activity, unlike in Step 2B. For example, if conventional steps were used to affect a particular treatment or prophylaxis for a disease or medical condition, or if conventional material was used in an unconventional application, the claims would be subject matter eligible.

The PTO warned against claiming methods as a series of mental processes, mere data gathering or steps that merely apply the judicial exception.

As noted, the PTO highlighted techniques for transforming subject matter ineligible claims into subject matter eligible claims. These techniques include reciting properties that naturally occurring compositions do not possess, showing that the claimed composition possesses properties not found in naturally occurring compositions, using a conventional material or conventional method in an unconventional application and specifying a particular treatment.

Practice Note: Readers may be interested in an IP Update Legislative Alert reporting on a bill introduced by Senator Tillis to amend §101, which can be found here.




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