By Michael Borella —
One final 35 U.S.C. § 101 case inched across the finish line at the end of 2018. And while this one is not particularly remarkable substantively, its concurrence from an opinionated judge may give it an unwelcome shelf life.
Background
Applicant Marco Guldenaar Holding B.V. filed U.S. Patent Application No. 13/078,196. During prosecution, the Examiner rejected a number of its claims under § 101 as allegedly being directed to patent-ineligible subject matter (the claims were also rejected as being obvious under § 103). Guldenaar appealed to the Patent Trial and Appeal Board, but the Board affirmed the Examiner. Guldenaar then appealed to the Federal Circuit.
The claimed invention is related to "dice games intended to be played in gambling casinos, in which a participant attempts to achieve a particular winning combination of subsets of the dice." Representative claim 1 recites:
1. A method of playing a dice game comprising:
providing a set of dice, the set of dice comprising a first die, a second die, and a third die, wherein only a single face of the first die has a first die marking, wherein only two faces of the second die have an identical second die marking, and wherein only three faces of the third die have an identical third die marking;
placing at least one wager on at least one of the following: that the first die marking on the first die will appear face up, that the second die marking on the second die will appear face up, that the third die marking on the third die will appear face up, or any combination thereof;
rolling the set of dice; and
paying a payout amount if the at least one wager occurs.
In Alice Corp. v. CLS Bank Int'l, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101. One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea. If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion. But elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.
The Majority Opinion
In its analysis, the Court leaned heavily on its holding from 2016's In re Smith. In that case, the Court found that claims directed to a method of playing a card game failed to meet the § 101 requirements. The Court's rationale for this decision was that the claimed invention was a method of conducting a wagering game, and thus tantamount to the methods of exchanging financial obligations found ineligible in Alice and Bilski v. Kappos.
Guldenaar argued that the Board improperly categorized the invention as an abstract idea under an overly-broad label: "methods of organizing human activities." The Court sympathized with Guldenaar, even noting that "this phrase can be confusing and potentially misused, since, after all, a defined set of steps for combining particular ingredients to create a drug formulation could be categorized as a method of organizing human activity." But the Court also observed that the Board further categorized the invention as being "rules for playing games" — a more specific type of abstract idea.
Importantly, the Court did not hold that game rules are per se patent-ineligible. Quoting Smith, the Court wrote that "[a]bstract ideas, including a set of rules for a game, may be patent-eligible if [the claims] contain an 'inventive concept' sufficient to 'transform' the claimed abstract idea into a patent-eligible application." But this acknowledgment did not help Guldenaar as the Court also stated that "[t]he claims here recite the steps of placing a wager, rolling the dice, and paying a payout amount if at least one wagered outcome occurs—none of which Appellant on appeal disputes is conventional, either alone or in combination." Thus, under the second step of Alice, "the claimed activities here are purely conventional and are insufficient to recite an inventive concept."
Guldenaar made a further argument, that "the specifically-claimed dice that have markings on one, two, or three die faces are not conventional and their recitation in the claims amounts to significantly more than the abstract idea." Applying printed matter doctrine, the Court rejected this notion, stating that "the printed indicia on each die are not functionally related to the substrate of the dice."
In his final substantive argument, Guldenaar contended that "playing a dice game cannot be an abstract idea because it recites a physical game with physical steps." The Court disagreed, noting that "the abstract idea exception does not turn solely on whether the claimed invention comprises physical versus mental steps" and that the ineligible inventions of Alice and Bilski both required actions in the physical world. Still, the Court reiterated that "inventions in the gaming arts are not necessarily foreclosed from patent protection under § 101" while ultimately finding the claims unpatentable under § 101.
Guldenaar also made a procedural argument, that the Board improperly treated claim 1 as representative of all claims. The Court, however, remarked that "Appellant's appeal brief to the Board included two claim group headings under its § 101 argument: one under which all rejected claims were discussed generally, and another under which Appellant merely quoted claim elements in dependent claims 10, 18, 24, and 26." Invoking Rule 41.37(c)(1)(iv), the Court explained that "for an applicant to receive separate consideration by the Board for each of its appealed claims, an applicant's appeal brief must contain substantive argument beyond a mere recitation of the claim elements." Thus, the Court found that the Board reasonably grouped all claims together with claim 1 being representative.
Judge Mayer's Concurrence
Judge Mayer is no stranger to the incendiary § 101 concurrence — look no further than Intellectual Ventures I v. Symantec Corp. or Ultramercial v. Hulu. Here, once again, he pushed back against holdings of the Federal Circuit (i.e., the law) with his personal opinions about the patent-eligibility (or the lack thereof) of software.
His opening volley set the stage:
First, subject matter eligibility under 35 U.S.C. § 101 is a pure question of law, one that can, and should, be resolved at the earliest stages of litigation. Second, claims directed to dice, card, and board games can never meet the section 101 threshold because they endeavor to influence human behavior rather than effect technological change.
There are three assertions masked as two in his statement, so let's take them apart.
Is subject matter eligibility a pure question of law? As of today, the answer is a clear and resolute "no!" And this is not just the opinion of a commentator, but that of the Federal Circuit in Berkheimer v. HP and a number of following decisions. At this point, a majority of the Court's judges accept that, in practice, many § 101 inquiries require at least some baseline factual analysis. The reason why the Court concluded so was to address the conundrum of having to determine whether elements of a claim were well-understood, routine, and conventional as a matter of law. Making this determination almost always involves some amount of comparison of claim language to what would ordinarily be called "prior art."
Judge Mayer quoted a number of decisions for the premise that "[e]ligibility questions mostly involve general historical observations, the sort of findings routinely made by courts deciding legal questions." And yet, the Berkheimer case itself involved a factual dispute that was far more than a matter of historical observation — whether the claimed invention recites a combination of elements that improved the performance of a computer. Even the Supreme Court's Bilski opinion referenced textbooks in order to establish that the claimed hedging procedure was a well-known economic practice. It is without dispute that not all § 101 questions can be resolved by referring to mere historical facts worthy of judicial notice. A deeper analysis is often necessary especially in the realm of complex software inventions.
Should subject matter eligibility issues be resolved at the earliest stages of litigation? This is a more nuanced question, and the ultimate answer is "only in some cases." Nevertheless, Judge Mayer reiterated his concurrence in Ultramercial, stating that "[r]esolving subject matter eligibility challenges early conserves scarce judicial resources, provides a bulwark against vexatious infringement suits, and protects the public by expeditiously removing the barriers to innovation created by vague and overbroad patents." Ignoring the unsupported assertions in the second half of this claim, the notion that being able to easily invalidate issued patents (which are presumed to be valid) during the pleadings stage and before the claims are fully construed is problematic at best.
To make an admittedly hyperbolic analogy, if there were no Fourth Amendment right for the government to establish reasonable cause prior to arresting and charging individuals with crimes, more criminals would end up in prison. But so would more innocent people, which is already a significant problem. Analogously, the sharp knife of a reinvigorated § 101 has been able to eliminate, early in litigation, a number of patents that probably should not have been granted by the USPTO. But the good patents are also taken down with the bad, and the value of many software patents has dropped due to the lingering unpredictability of the Alice test. Given the importance of software innovation to the U.S. economy, being able to invalidate such patents based on a less than thorough application of a vague judge-made rule is a questionable practice.
Should gaming inventions be patentable? Like the issue of facts in the § 101 analysis, the Federal Circuit has answered this question in the positive, albeit for certain types of gaming inventions that are claimed properly. Judge Mayer, however, opined that:
The fault line for patent eligibility generally runs along the divide between man and machine. Simply put, while new machines and mechanized processes can potentially be patent eligible, ideas about how to improve or influence human thought and behavior fail to pass section 101 muster. This is why claims telling people how to mitigate settlement risk, how to hedge against risk in consumer transactions, or how to play a game of cards, are directed to non-statutory subject matter.
This is not the law, and for good reason. Trying to divide an invention into the technological and human parts is often an exercise in futility. The patent-eligible invention of DDR Holdings v. Hotels.com was a hybrid web site meant to attract visitors with a familiar look and feel. Is that a technological or business-oriented invention? Depending how you look at it, either answer is possible. The same could be said for self-driving car software that attempts to predict or influence the behavior of human drivers, as well as a neural-network-based machine learning system that makes photographs more pleasing to the human eye.
Trying to answer Judge Mayer's machine versus human inquiry is, in practice, as difficult as defining the term "abstract idea" and just as unworkable. Under his rubric, inventions that require significant technical advances can be viewed as directed to "organizing human behavior," and therefore deemed ineligible just because the invention came about with the goal of changing such behavior. In a more rational worldview, whether the goal or the outcome of an invention involves a human element should be completely irrelevant — instead the question to ask is whether the invention involves a focused and significant advance over the state of the art.
In sum, Judge Mayer doesn't like software patents. But his broad, sweeping language should not be mistaken for the current state of § 101 affairs, nor should it be used to influence our thought or behavior regarding such affairs.
In re Marco Guldenaar Holding B.V. (Fed. Cir. 2018)
Panel: Circuit Judges Chen, Mayer, and Bryson
Opinion by Circuit Judge Chen; concurring opinion by Circuit Judge Mayer
Strafford will be offering a webinar entitled "Patent Eligibility and Engineered Natural Products — Overcoming 101 Challenges, Leveraging Options to Obtain IP Protection" on January 15, 2019 from 1:00 to 2:30 pm (EST). Virginia L. Carron, Jessica L.A. Marks, and Erin M. Sommers of Finnegan Henderson Farabow Garrett & Dunner will guide patent counsel on patent eligibility issues with engineered natural products, examine the key considerations in determining patentability and review recent case law, and also address alternatives for getting IP protection for engineered natural products. The webinar will review the following issues:
Patent Docs 