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Friday, 13 May 2016

The Federal Circuit Resurrects Computer-Implemented Inventions?

The U.S. Supreme Court's case, Alice Corp. v. CLS Bank International, has become the U.S. case concerning the patentability of computer-implemented inventions.  The case essentially establishes a two-step test for determining whether a computer-implemented invention falls within patent-eligible subject matter under section 101 of the Patent Act.  Since the passage of Alice, many have declared patentable computer-implemented inventions mostly dead.  However, a glimmer of hope appeared in DDR Holdings v. Hotels.com.  On May 12, 2016, the Federal Circuit has provided even more hope in Enfish v. Microsoft.

Hmmm.  The game was characterizing the abstract idea.
Now is it claim drafting gamesmanship? 
The two-step Alice test is used to determine whether computer-implemented inventions are patent eligible subject matter.  The first step asks whether the claimed invention is "directed to" an abstract idea, natural phenomena or law of nature.  Part of the problem with the first step is that the inquiry devolved into defining what is in the claim as an abstract idea.  A clever lawyer can argue that something claimed contains an abstract idea.  Indeed, the Supreme Court recognized that most inventions involve the application of an abstract idea.  Unfortunately, there appeared to be very little that hedged in or guided the analysis in the first step.  Thus, some courts were willing to move quickly to the second step.  If the answer to the first question in the first step is yes, then the second step essentially asks whether there is an inventive concept in the claim. 

Until May 12, 2016, the most important case concerning computer-implemented inventions besides Alice was the DDR Holdings v. Hotels.com case.  DDR Holdings is the one Federal Circuit decision (2 to 1) that found a computer-implemented invention as consisting of patent eligible subject matter post-Alice. 

As of May 12, 2016, there is a new important Federal Circuit case on patent eligible subject matter and computer-implemented inventions.  Enfish v. Microsoft finds a computer-implemented invention--an invention directed to a self-referential table--patent eligible.  Importantly, the decision explains how to apply the first step in the Alice test--whether the claimed invention includes an abstract idea, natural phenomena or law of nature.  Notably, the Federal Circuit appears to chastise lower courts for quickly finding that computer-implemented invention claims contain an abstract idea.  The Federal Circuit stated:
"We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step-two.  Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly not abstract, such as chip architecture, an LED display, and the like.  Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis.  Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route.  We thus see not reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract and necessarily analyzed at the second step of Alice, nor do we believe that Alice so directs.  Therefore we find it relevant to ask whether the claims are directed to an improvement in computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis."
Hope!  So wonderful!
The Federal Circuit then analyzes how the relevant claims, as construed by the district court, are not directed to an abstract idea.  The Federal Circuit frames its analysis by stating, "[T]he first step in the Alice inquiry in this case asks whether the focus of the claims is on the specific asserted improvement in computer capabilities (i.e., the self-referential table for a computer database) or, instead, on a process that qualifies as an "abstract idea" for which computers are invoked merely as a tool."  Notably, the Federal Circuit is pivoting and moving the question of whether a computer-implemented invention improves the functioning of the computer itself to the first step, instead of analyzing it in the second step.

The Federal Circuit also cautions that over-generalizing the invention in the claim to find an abstract idea is not the correct way to analyze step one.  There must be a focus on the invention as claimed--particularly the language of the claim in light of the specification (and as interpreted by the District Court). 

In examining the claims, the Federal Circuit noted that the invention claimed a self-referential database and the specification included numerous references to how the invention improved the functioning of the computer.  The Federal Circuit also rejected arguments that this was not a patent- eligible invention because it is used in connection with a general purpose computer and claimed without physical components.  The court concluded that, "the claims are directed to a specific implementation of a solution to a problem in the software arts."

While providing hope to those in favor of software patenting, the saddest part of the analysis is that for past patented inventions, you can only pray that your patent attorney had the foresight to predict the Federal Circuit.  For future patented inventions, this is helpful--at least until the next U.S. Supreme Court decision.  The United States Patent and Trademark Office has published numerous helpful documents to assist examiners (and those applying for patents) in applying the Alice test--time to update the documents again. 

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