By Michael Borella —

Interval Licensing brought an action against AOL and several other defendants in the Western District of Washington, alleging infringement of U.S. Patent No. 6,034,652.  In a previous ruling, all asserted claims of this patent were invalidated as being indefinite.  At issue in this decision are claims 15-18, which were subsequently ruled invalid for failing to recite patent-eligibile subject matter under 35 U.S.C. § 101.

As an example, claim 18 recites:

A computer readable medium, for use by a content display system, encoded with one or more computer programs for enabling acquisition of a set of content data and display of an image or images generated from the set of content data on a display device during operation of an attention manager, comprising:
    acquisition instructions for enabling acquisition of a set of content data from a specified information source;
    user interface installation instructions for enabling provision of a user interface that allows a person to request the set of content data from the specified information source;
    content data scheduling instructions for providing temporal constraints on the display of the image or images generated from the set of content data;
    display instructions for enabling display of the image or images generated from the set of content data;
    content data update instructions for enabling acquisition of an updated set of content data from an information source that corresponds to a previously acquired set of content data;
    operating instructions for beginning, managing and terminating the display on the display device of an image generated from a set of content data;
    content display system scheduling instructions for scheduling the display of the image or images on the display device;
    installation instructions for installing the operating instructions and content display system scheduling instructions on the content display system; and
    audit instructions for monitoring usage of the content display system to selectively display an image or images generated from a set of content data.

According to the Court, the invention involves a software application referred to as an "attention manager."  This application "makes use of 'unused capacity' of a display device, by displaying content in that unused capacity."  Thus it can display "content when the display device is turned on but the user is not actively engaged with the display device" as well as displaying "content in an area of the display screen not used by already-displayed content with which the user is actively engaged."

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 generic computer implementation of an otherwise abstract process does not qualify as "significantly more," nor will elements that are well-understood, routine, and conventional lift the claim over the § 101 hurdle.

Applying step one of Alice, the Court quickly concluded that the claimed invention was directed to "providing information to a person without interfering with the person's primary activity."  This, in and of itself, is an abstract idea according to the Court due to it being analogous to news tickers on television programs, for example.  The Court also frowned upon the claim's "broad, result-oriented" structure that "demands the production of a desired result (non-interfering display of two information sets) without any limitation on how to produce that result."

Regarding step 2, the Court again criticized the claim's lack of detail, stating that it "do[es] not recite any arguably inventive method of how the secondary information is displayed, such as what portion of the screen is utilized or how the primary activity on the screen is monitored."  Interval Licensing argued that the claim "improve[s] computer display devices by combining the acquired information with the user's primary display interaction."  But the Court did not view this ability as an improvement, largely because the claim is broad enough to encompass any mechanism to achieve this goal.  Arguably, this would include prior known mechanisms.

Consequently, claims 15-18 were ruled invalid as directed to non-eligible subject matter.

This opinion would just be another ho-hum, run-of-the-mill § 101 decision if not for Judge Plager filing a concurrence-in-part and dissent-in-part.  While not binding law, he has provided the most pointed (and sarcastic) criticism of the Alice test and how § 101 is currently applied that we have yet to hear from a sitting Federal Circuit judge.  Even a casual read of his concurring / dissenting remarks indicate that he has chosen his language carefully.  Thus, we will block quote much of what he wrote.

He begins with an indication of what is to come:

Given the current state of the law regarding what inventions are patent eligible, and in light of our governing precedents, I concur in the carefully reasoned opinion by my colleagues in the majority, even though the state of the law is such as to give little confidence that the outcome is necessarily correct.  The law, as I shall explain, renders it near impossible to know with any certainty whether the invention is or is not patent eligible.

He then indicates that the term "abstract idea" as used by the courts is far removed from its plain meaning:

An idea itself by definition is "[s]omething, such as a thought or conception, that is the product of mental activity."  The definitions of "abstract" include "[c]onsidered apart from concrete existence," "[d]ifficult to understand; abstruse," and "[n]ot applied or practical; theoretical."  An idea, whether abstract or not, is something that lives in the interstices of someone's brain, a psychophysiological area not fully understood to this day.

Thus, by the very nature of the term, it is difficult if not impossible to apply the test to claimed inventions, and that focusing on whether a claim is to an outcome or a process to achieve that outcome does little to clarify the situation:

And ideas can have an infinite range of abstractness, if by that we imply concreteness—for example, compare "I have an idea—let's have hamburgers for dinner," with "I have an idea—I am going to invent how to make time go backwards."  How much of abstractness is a function of concreteness?  How do we pick the line where the articulation and explication of an idea is sufficiently concrete to be 'non-abstract,' but not so much as to be 'generic and conventional'?  Does it help to phrase the notion as the difference between claiming a desired result and claiming how to produce that same result?  Or are we just substituting one set of vague notions for the other, with the same line-drawing problem?

He backs this up by noting that "a search for a definition of 'abstract ideas' in the cases on § 101 from the Supreme Court, as well as from this court, reveals that there is no single, succinct, usable definition anywhere available."  Further, "[t]he problem with trying to define 'abstract ideas,' and why no court has succeeded in defining it, is that, as applied to as-yet-unknown cases with as-yet-unknown inventions, it cannot be done except through the use of equally abstract terms."

Judge Plager then fires a shot:  "[t]he 'abstract ideas' idea, when used for denying a claimed invention's patent eligibility either before or after a patent is issued, cannot thus function as a valid rule of law."  Making an analogy to the I-know-it-when-I-see-it notion of obscenity, he writes:  "the 'abstract ideas' idea falls short in the sense of providing a trial judge with confidence that the judgment will be understood by the judges who come after."

He goes on to question whether step two of Alice, the search for an "inventive concept" in an abstract claim, makes any sense at all:

A small puzzle—if a court, after reviewing challenged claims in light of their terminology and written description, determines the claims to be 'abstract' in Step 1, how can the same court be expected to determine on a second reading that the same claims have become 'un-abstract' via Step 2?  Could it be that an 'inventive concept' cannot exist until the court reads the patent at least one more time?  Perhaps courts cannot be expected to read the claims carefully enough the first time?

Judge Plager then makes an analogy between the notion of an inventive concept and similar "inventive requirements" that were eliminated from the § 103 obviousness inquiry by the 1952 Patent Act:

As a decisional construct for validation of a property right—a patent—the idea of a necessarily underlying 'inventive concept' proved unworkable.  The concept provided no discernable boundaries for decision-making in specific cases, resulting in an incoherent legal rule that led to arbitrary outcomes.  Judge Rich, who devoted his life to patent law, saw this clearly, and gave the Congress a workable alternative—nonobvious subject matter—which they adopted.

Finally, Judge Plager focuses on recent criticism of Alice from his colleagues, Judges Linn and Lourie, as well as academics, commentators, and the former head of the USPTO.  He also points to the bases of this criticism:

There is little consensus among trial judges (or appellate judges for that matter) regarding whether a particular case will prove to have a patent with claims directed to an abstract idea, and if so whether there is an 'inventive concept' in the patent to save it.  In such an environment, from the viewpoint of counsel for the defense, there is little to be lost in trying the § 101 defense.  We are left with a process for finding abstract ideas that involves two redundant steps and culminates with a search for a  concept—inventiveness—that some 65 years or so ago was determined by Congress to be too elusive to be fruitful.  Is it any wonder that the results of this process are less than satisfactory?

Turning to those who view modern, information-age inventions with disfavor, he adds:

With the rise of software and business method patents, the 'abstract idea' became a weapon of choice for summary execution of what many decried as 'bad' patents.  The problem is that it does not distinguish good from ill in any coherent sense, and thus does not serve well either patent law or the public.

Judge Plager then encourages district courts to defer § 101 determinations until after challenges under §§ 102, 103, and 112 have been decided, and suggests that many of the so-called "bad" patents killed off under § 101 would fail to meet these other statutory requirements.  Thus, in his view, there is no need to address § 101 on the pleadings for example.

Judge Plager finishes with another strong statement:

This emperor clearly has no clothes; we need not wait for our children to tell us this.  The legitimate expectations of the innovation community, as well as basic notions of fairness and due process, compel us to address this § 101 conundrum.

There is little that Judge Plager writes in this concurrence / dissent that has not already been said many times by many individuals.  But his position as an active appellate jurist and the power of his choice of words lend additional weight to the growing sense of institutional disapproval over current patent-eligibility practice.  There still might not be enough momentum for the Supreme Court or Congress to rectify the situation, but a strong voice that cannot be ignored has joined the fray.

Interval Licensing LLC v. AOL, Inc. (Fed. Cir. 2018)
Panel:  Circuit Judges Taranto, Plager, and Chen
Opinion by Circuit Judge Chen; opinion concurring-in-part and dissenting-in-part by Circuit Judge Plager

By Michael Hinrichsen*, Anthony D. Sabatelli**, and
Jonathan Schuchardt*** —

Buried amidst the flurry of recent Federal Circuit subject matter eligibility decisions is a question that could significantly change how Section 101 is applied in patent litigation.  Specifically, the issue is whether performing Step 2 of the Mayo/Alice test can require a factual inquiry.  If upheld, this interpretation of Alice could make patent litigation much more complicated and expensive.  In fact, Section 101 inquiries could become convoluted mini-trials in their own right — similar to how Markman hearings are performed today.

Determining whether a patent covers an ineligible concept requires applying the two-step Mayo/Alice test formulated by the Supreme Court in Mayo v. Prometheus and Alice Corp. v. CLS Bank.  This test consists of two steps:  1) determining whether an invention is directed to a patent-ineligible concept (natural law, natural phenomenon, or abstract idea), and if it is, then 2) determining, after considering the elements of each claim both individually and as an "ordered combination," whether the additional elements "transform the nature of the claim into a patent eligible application."  Step 2 is satisfied when the claim limitations involve more than performance of "well-understood, routine, [or] conventional activities previously known to the industry" (quoting Berkheimer v. HP, decided February 8, 2018).  Previous Section 101 inquiries in patent litigation have conducted this process entirely within the preliminary stages of a trial, either during the pleadings or on a summary judgment motion and have treated the matter entirely as a question of law.  Parties challenging the validity of a patent could simply assert that some step was routine or conventional without providing any evidence to support this contention.  The CAFC's recent decisions in Berkheimer v. HP, Aatrix v. Green Shades, and Automated Tracking Solutions v. Coca-Cola are the first to posit that whether an element of a claimed invention is 'inventive' is "a question of law which may contain underlying facts" (quoting Berkheimer).

In Berkheimer, the validity of a patent ultimately hinged upon whether a particular feature of the claimed invention could be considered inventive.  According to the panel, conventionality is determined by what others skilled in the art were doing at the time the invention was made, i.e., a question of fact.  Berkheimer argued that summary judgment was not appropriate because genuine issues of material fact remained regarding whether the claimed invention was well-understood, routine, and conventional, a question for which HP had offered no evidence.  The Court distinguished between what is known and what is "well-understood, routine and conventional."  Judge Moore writes:  "Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art.  The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional."

Aatrix, decided February 14, 2018, doubled down on the Berkheimer decision, holding that a factual inquiry had to be performed to establish whether a step was genuinely unconventional.  While the case was remanded during the pleadings phase of Aatrix (as opposed to during a summary judgment as in Berkheimer) the reasoning underlying the decision was essentially the same.  During pleadings before the District Court, Aatrix attempted to file an amended complaint that it claimed contained information relevant for determining the eligibility of the disputed invention.  The District Court denied the motion to amend.  The CAFC ruled that it was necessary for courts to consider any evidence relevant to determining the eligibility of a patent, and therefore, such amendments had to be permitted.  In Aatrix, the District Court also ruled that the patents in dispute were invalid before claim construction could be performed.  The CAFC disagreed:  "If there are claim construction disputes at the 12(b)(6) stage . . . either the court must proceed by adopting the non-moving party's constructions . . . or the court must resolve the disputes to whatever extent is needed to conduct the § 101 analysis, which may well be less than a full, formal claim construction."

While this fact vs. law debate may seem esoteric and inconsequential, it has strong implications for how Section 101 inquiries are performed.  As Judge Reyna points out in his dissent in Aatrix, "[o]ur precedent is clear that the § 101 inquiry is a legal question."  Making the Section 101 inquiry factual "opens the door in both steps of the Alice inquiry for the introduction of an inexhaustible array of extrinsic evidence, such as prior art, publications, other patents, and expert opinion."  Judge Reyna is also concerned that a patent holder "facing a 12(b)(6) motion may simply amend its complaint to allege extrinsic facts that, once alleged, must be taken as true, regardless of its consistency with the intrinsic record."

Automated Tracking Solutions ("ATS"), decided February 16, 2018 (non-precedential), offers a counter to Judge Reyna's complaints and may balance the concerns of patent holders and challengers moving forward.  In this case, ATS pursued a strategy similar to that warned against by Judge Reyna in Aatrix, claiming that an element of its inventory control system was unconventional in the hopes of transforming Step 2 of Alice into a factual dispute.  However, ATS was unable to point to any individual component or combination of components in its system that was novel, and the specification described the invention as depending upon standard technology.  Lacking any supporting evidence, the Court concluded that there was no genuine factual dispute and thus no reason to perform a factual inquiry.

Troubling questions continue to emanate from the factual vs legal question debate.  Will other panels support this view of Step 2 of Alice?  To date, all supporting decisions have been penned by Judge Moore.  Additionally, HP has filed a petition for an en banc review.  If upheld, it is unclear what level of evidence would be required for a court to conclude that a factual inquiry is necessary.  Based on Berkheimer, it appears that if a specification describes a claimed feature as novel and that feature is eligible for consideration as an inventive concept, this may suffice to establish a genuine issue of material fact.  It is unclear how such a factual inquiry would proceed, however, or what kind of evidence and how much of it would be required to establish that a claimed element is 'inventive.'  Regardless of how these inquiries are eventually performed, if upheld, treating Step 2 of Alice as a legal question with factual underpinnings will undoubtedly complicate Section 101 inquiries.

* Dr. Hinrichsen received a Ph.D. in Molecular Biophysics and Biochemistry from Yale University.  Dr. Hinrichsen's thesis research was focused on using protein design to develop novel methods for imaging proteins and genomic loci in living cells.  Prior to attending Yale, Dr. Hinrichsen graduated with a B.S. in Chemistry from the College of New Jersey.
** Dr. Sabatelli is a Partner with Dilworth IP.
*** Dr. Schuchardt is a Partner with Dilworth IP.