• By Chris Vindurampulle* —

    Australia Coat of ArmsTwo recent Australian Patent Office decisions have provided clarity as to the patentability of isolated nucleic acid sequences following the High Court's decision in D'Arcy v Myriad Genetics1 ('Myriad').  The first decision is perhaps not such a surprise, however the second decision represents a clear contradiction in Patent Office practice following Myriad until now.  The outcome of both decisions is greater certainty, at least for those in the life sciences industry seeking patent protection in Australia.

    Brief Background

    The October 2015 High Court decision in Myriad has been covered extensively.2  While isolated DNA is different on a chemical and structural level to DNA as it naturally exists, the key point from the High Court's decision was the determination that the substance of a patent claim directed to an isolated mutant 'breast cancer gene' was the information embodied in the claimed molecule.  That information was deemed to be naturally occurring.  Consequently, the Court found claims directed to the isolated mutant gene were not eligible for patent protection in Australia.

    Subsequent to Myriad, the Australian Patent Office issued updated examination practice guidelines for considering eligibility of patent claims directed to isolated nucleic acid sequences.  The guidelines set out several questions which enables examiners to make a call on whether a claim directed to an isolated nucleic acid is patent eligible.  These questions include an assessment of:

    • the 'substance' of a claim (not merely its form),
    • whether that substance is 'made' or 'artificial', and
    • whether the claimed invention has economic utility.

    Notably, the guidelines state that certain subject matter is to be clearly excluded from patent eligibility.  This includes isolated, naturally occurring nucleic acid molecules, whether DNA or RNA, human or non-human, or coding or non-coding.  Further, relevant to the second case below is the statement in the guidelines that claims to isolated interfering/inhibitory nucleic acids (which merely replicate genetic information of a naturally occurring organism) are also to be excluded from patent protection.

    Cargill Incorporated v Dow AgroSciences LLC [2016] APO 43 ('Cargill')

    This decision concerns Cargill Incorporated's opposition to Dow Agrosciences' patent application which broadly relates to the production of oil in genetically engineered canola.

    Claim 31 of the opposed application is directed to an isolated DNA sequence coding for an enzyme derived from a fungus.  Expressing the fungus-derived gene in canola causes a modification to the oil which provides a health benefit.  Although claim 31 was not opposed by Cargill, the hearing officer invited both parties to provide submissions in light of the High Court's findings in Myriad.  Only Dow provided submissions.

    Although not expressly stated, the unique feature of claim 31 was that the 'information' embodied in the isolated fungal nucleic acid had been altered from that which normally exists (codon optimised for those technically inclined) such that, when the gene is expressed in an oil producing plant, the corresponding gene product is more efficiently produced, albeit that the gene product itself is not different from that which naturally exists.

    The hearing officer concludes at paragraphs [44] to [45] that the 'substance' of claim directed to the altered fungal gene is different from the mutant breast cancer gene in Myriad.  Specifically, the officer's view was that the genetic information embodied in the isolated fungal nucleic acid had been modified, and that its economic utility in oil production in genetically engineered canola was clear.

    Accordingly, claim 31 was considered to comprise patent eligible subject matter.

    Arrowhead Research Corporation [2016] APO 70 ('Arrowhead')

    Arrowhead concerns a patent application which relates to interfering RNA (or iRNA) compositions.  The outcome of using iRNA compositions is specific targeting and modification of gene expression.  In Arrowhead's application, the iRNA compositions were directed to treating inflammatory conditions such as allergic conjunctivitis, ocular inflammation, dermatitis, rhinitis, and asthma by way of controlled gene expression.

    Prosecution of Arrowhead's application had stalled given the examiner's insistence that the claims directed to iRNA compositions were not patent eligible.  Specifically, it was the examiner's view that RNA interference is only possible because the sequence of nucleotides is the same to that which occurs in the genome.

    The attorney for the applicant exercised the option of requesting an ex parte hearing on the matter which provides the option of having an independent assessment of any outstanding objections.

    Bearing in mind that Patent Office examination guidelines have, until now, provided that iRNA molecules are to be excluded from patent protection, the key points as argued by Arrowhead's attorney was that the claimed iRNA molecules do not normally exist in nature, and the manner in which iRNA-mediated gene silencing works is not solely dependent on the sequence of nucleotides in an iRNA molecule.  Further distinguishing the claims from patent ineligible subject matter was the fact that it was a 'composition' that was claimed rather than an isolated RNA molecule per se.

    The hearing officer concludes at para [29] that based on a consideration of how RNAi-mediated gene silencing works, the substance of the claims was more than genetic information alone, and the claimed compositions were products having economic utility.

    Accordingly, the claims directed to compositions comprising iRNA molecules were found to be patent eligible.

    Conclusion

    The above decisions not only provide clarity for those prosecuting nucleic acid-based product claims in Australia, but also support for arguing against patent eligibility objections raised against such claims during examination.  Clearly, if a claim directed to a nucleic acid molecule provides more than genetic information alone (by modification or otherwise), there is now greater opportunity for arguing in support of patent eligibility and obtaining a broader scope of protection.

    This is good news for those in the life sciences industry seeking patent protection in Australia.

    The Arrowhead decision also highlights that an ex parte hearing can be a useful strategy for prosecuting Australian patent applications where the applicant faces examination hurdles.

    _______________________________________________________________________________________

    1 D'Arcy v Myriad Genetics Inc [2015] HCA 35
    2 See for example "Australian High Court Nukes Biotech Industry from Orbit: "It's the Only Way to be Sure"" by Dr. Mark Summerfield, and "Patent eligibility in Australia: the winding road ahead" by Dr. Tania Obranovich.

    * Dr. Vindurampulle is an Associate with Watermark.

    This article was reprinted with permission from Watermark.

  • By Kevin E. Noonan

    Federal Circuit SealThe patent prosecutor's art requires exquisite foresight, if not prescience, in balancing the requirements for specificity needed to satisfy the disclosure requirements of § 112 while anticipating efforts to design around the claimed invention.  In a recent nonprecedential opinion, the Federal Circuit illustrated the consequences when these efforts prove inadequate, in Roxane Labs., Inc. v. Camber Pharm. Inc.

    The case involved Roxane's U.S. Patent No. 8,563,032 ("the '032 patent"), which was directed to "a capsule formulation of calcium acetate granules, with each capsule containing a dose of 667 mg calcium acetate on an anhydrous basis."  The claimed formulations are used to treat end-stage kidney disease characterized by excess serum phosphorous levels, wherein the calcium acetate binds dietary phosphorus and prevents absorption by the gastrointestinal tract.  Claim 1 is representative:

    A calcium acetate capsule formulation comprising flowable granules comprised of a pharmaceutically acceptable amount of calcium acetate along with other pharmaceutically acceptable adjuvants, wherein said granules are filled into and contained within a pharmaceutically acceptable capsule such that 667 mg of said calcium acetate on an anhydrous basis are present in said capsule that is size 00 or less.

    It was undisputed that Camber's accused infringing article used capsules of size 00el, which had the same diameter but an elongate longitudinal profile.  The District Court construed the claims to be limited to "standard" size 00 capsules and that Camber's 00el capsules were outside the scope of the claims as the court construed them.  After claim construction Roxane sought and received a directed verdict, to pursue its appeal of the District Court's claim construction.

    The Federal Circuit affirmed, in an opinion by Judge Lourie joined by Judges Mayer and O'Malley.  The panel found that the District Court properly relied on solely intrinsic evidence (and thus reviewed claim construction de novo), based on both the explicit disclosure in the specification and the prosecution history, specifically declaration evidence from one of the named inventors.

    Regarding the disclosure, the Federal Circuit held that as used in the specification the term "size 00" was limited to standard length capsules and not the elongated 00el capsules used by Camber.  As the opinion characterizes the parties' differing positions, "[t]he main dispute in this appeal is whether 'size 00' in the '032 patent refers to a capsule of a specific diameter, length, and fill volume, or to a family of capsules with the same diameter but varying lengths and fill volumes."  The panel based its conclusion on the mere two instances in the specification of the term "size 00," which according to the opinion contained disclosure regarding the amount of calcium acetate the capsule can contain.  Because size 00el capsules should contain more calcium acetate than size 00 capsules (because while having the same diameter the capsules have different lengths and thus volumes that differ by πr2 (looelloo)), Roxane's argument that the term "size 00" capsule should encompass size 00el capsules was inconsistent with statements in the specification regarding the content by weight of calcium acetate in the claimed formulation.

    The prosecution history supported this conclusion.  As set forth in the opinion, the Examiner had rejected the claims based on prior art regarding size 0 capsules filled with compressed anhydrous calcium acetate and art that taught calcium acetate granules; also cited was a prior art table of capsule sizes (which did not list any elongated capsule sizes).  Roxane argued that statements by the Examiner that the amount of calcium acetate contained in size 00 capsules was 50% greater than in size 00 capsules encompassed size 00el capsules, because as it turns out size 00el capsules contain exactly 50% more calcium acetate than size 0 capsules.  The panel disagreed, finding that the evidence in the prosecution history showed the Examiner relied on the capsule size table only with regard to size 00 capsules and not the elongated variant.

    This conclusion was supported, according to the Federal Circuit, by statements in the inventor's declaration provided during appeal of this obviousness rejection before the Patent Trial and Appeal Board.  In that appeal, the inventor stated that the prior art granules could not be filled in size 00 capsules in the amounts required by the claims.  The opinion interprets these statements as indicating that "size 00 capsules" had a specific and determined volume and that these statements were not consistent with the term comprising a family of capsules of constant diameter but differing lengths (and hence volumes).  In addition, in a Reply brief filed in the PTAB appeal Roxane had "emphasized that claim 1 does not cover capsules that are larger and have more fill capacity than 'size 00'" and that the volumes contained in the claimed capsules differed from what was possible in capsules that could be prepared according to the prior art.  These arguments were persuasive before the Board.  The Federal Circuit thus concluded that "size 00el capsules, which have a greater fill volume than the standard size 00 capsules tested by [the inventor], are outside the scope of the claims" and thus the District Court properly construed the claims to exclude the accused infringing article.

    The appeal also contained a challenge by Roxane that the case should not have been transferred from a district court in the Sixth Circuit to a district court in the Third Circuit, but could not show any abuse of the court's broad discretion to transfer.

    Assuming that size 00el capsules were known in the art (it seems evident that they were), Roxane's failure to preclude Camber from designing around their claims by changing the length of the claimed capsules suggests that these embodiments were not contemplated by the inventors or their counsel.  The outcome of this case shows how difficult it can be to envision all the ways a clever competitor can find embodiments of a claimed invention that falls outside the scope of the claims, and that as a result the protection assumed to be provided by the patent may ultimately fall short of what the patentee needs to protect its franchise.

    Roxane Labs., Inc. v. Camber Pharm. Inc. (Fed. Cir. 2016)
    Nonprecedential disposition
    Panel: Circuit Judges Lourie, Mayer, and O'Malley
    Opinion by Circuit Judge Lourie

  • By Michael Borella

    Federal Circuit SealAmdocs sued Openet in the Eastern District of Virginia, alleging infringement of U.S. Patent Nos. 7,631,065, 7,412,510, 6,947,984, and 6,836,797.  Openet moved for judgment on the pleadings on the grounds that all four patents were invalid under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter.  The District Court granted the motion and Amdocs appealed.

    The patents-in-suit relate to an accounting and billing system for network service providers.  In the words of the Federal Circuit:

    The '065 patent concerns a system, method, and computer program for merging data in a network-based filtering and aggregating platform as well as a related apparatus for enhancing networking accounting data records.  The '510 patent concerns a system, method, and computer program for reporting on the collection of network usage information.  The '984 patent concerns a system and accompanying method and computer program for reporting on the collection of network usage information from a plurality of network devices.  The '797 patent concerns a system, method, and computer program for generating a single record reflecting multiple services for accounting purposes.

    The inventions allow the service providers to bill for Internet Protocol (IP) traffic.  The distributed nature of the disclosed systems "minimizes the impact on network and system resources," and "minimizes network impact by collecting and processing data close to its source."  Particularly, "[e]ach patent explains that this is an advantage over prior art systems that stored information in one location, which made it difficult to keep up with massive record flows from the network devices and which required huge databases."

    A claimed invention is eligible for patenting under 35 U.S.C. § 101 if it meets the requirements of the two-step test set forth by the Supreme Court in Alice Corp. v. CLS Bank Int'l.  According to the test, one must first determine 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 determine 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."  A goal of this test is to prevent one from patenting judicial exclusions, and thereby preempting others from using these basic scientific tools.

    Judge Plager wrote the majority decision, which was joined by Judge Newman.  Judge Reyna dissented.

    The Majority Decision

    Upon review of the Alice test, the Court noted that "there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished without going beyond step one," but also admitted that "there is no such single, succinct, usable definition or test" for what an 'abstract idea' encompasses.  Rather than wringing its hands over this lack of grounding, the Court observed that "the decisional mechanism courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen."

    Undertaking this comparative endeavor, the Court briefly reviewed cases dealing with related subject matter.  In Digitech Image Techs v. Elecs. for Imaging, Inc., Content Extraction & Transmission v. Wells Fargo Bank, and In re TLI Commc'ns LLC Patent Litig., the Court found claims ineligible.  But in DDR Holdings v. Hotels.com and BASCOM Global Internet Servs. v. AT&T Mobility, the Court found claims to be eligible.

    Turning to the patents-in-suit, the Court noted that it would take into consideration the District Court's claim construction, as well as the patents' written descriptions.  While the Court reviewed all four patents in detail, we will focus on representative claims from only two.

    a.  The '065 Patent

    Claim 1 of the '065 patent recites:

    1.  A computer program product embodied on a computer readable storage medium for processing network accounting information comprising:
        computer code for receiving from a first source a first network accounting record;
        computer code for correlating the first network accounting record with accounting information available from a second source; and
        computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.

    The Court observed that, on its face, this claim shares commonalities with claims from all five of the cases cited above, but it is closer to those of DDR Holdings and BASCOM than the others.  Thus, while involving the potentially abstract notions of organizing information, recognizing data, and classifying information found ineligible in Digitech, Content Extraction, and TLI, the claim went beyond these mere concepts.

    Particularly, the Court focused on the term "enhance," which was construed as "to apply a number of field enhancements in a distributed fashion."  According to the District Court, this meant that "the network usage records are processed close to their sources before being transmitted to a centralized manager."  The Federal Circuit found this distributed processing to be "a critical advancement over the prior art" because (as stated in the specification of the '065 patent) in the prior art "all the network information flows to one location, making it very difficult to keep up with the massive record flows from the network devices and requiring huge databases."  Thus, in the Court's view "this claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases)."

    The Court then went to great lengths to distinguish this claim over those of Digitech and Content Extraction, the claims in those cases being broader, more preemptive, generic, ordinary, and lacking inventive concepts.  The Court also drew parallels between claim 1 and that of BASCOM, noting that "when all limitations are considered individually and as an ordered combination, they provide an inventive concept through the use of distributed architecture."

    Thus, claim 1 was found to be patent-eligible, apparently meeting the requirements of both steps of the Alice test.

    b.  The '510 Patent

    Representative claim 16 of the '510 patent recites:

    16.  A computer program product stored in a computer readable medium for reporting on a collection of network usage information from a plurality of network devices, comprising:
        computer code for collecting network communications usage information in real-time from a plurality of network devices at a plurality of layers;
        computer code for filtering and aggregating the network communications usage information;
        computer code for completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users;
        computer code for storing the plurality of data records in a database;
        computer code for submitting queries to the database utilizing predetermined reports for retrieving information on the collection of the network usage information from the network devices; and
        computer code for outputting a report based on the queries;
        wherein resource consumption queries are submitted to the database utilizing the reports for retrieving information on resource consumption in a network; and
        wherein a resource consumption report is outputted based on the resource consumption queries.

    The Court viewed this claim as requiring "that the network usage information is collected in real-time from a plurality of network devices at a plurality of layers and is filtered and aggregated before being completed into a plurality of data records."  Again relying on claim construction, the Court noted that the term "completing" was construed to mean "enhance a record until all required fields have been populated" where "enhance" has the same meaning as it did for the '065 patent.

    The Court also reviewed the claims in light of the specification.  Particularly, "[t]he written description explains that the distributed architecture allows the system to efficiently and accurately collect network usage information in a manner designed for efficiency to minimize impact on network and system resources."  As detailed in the specification, doing so has a number of purported advantages over the prior art.  Thus, as was the case for the '065 patent, the Court found this claim to satisfy both steps of the Alice test because it recited a technological improvement and involved an inventive ordered combination of components.

    c.  The Remaining Patents

    The Court found the '984 and '797 patents to be eligible based on reasoning similar to that discussed above.  Therefore, all of the Amdocs patents passed muster under § 101, and the District Court's ruling was reversed.

    The Dissent

    Judge Reyna's dissent is nearly as long as the majority opinion, and was written in the style of a majority opinion.  Thus, this case may have been a close call, with Judge Newman being swung to Judge Plager's side late in the game.

    Judge Reyna took issue with the majority not identifying abstract ideas to which the claims are directed, as well as the majority's liberal importation of limitations from the specification.  Particularly, the distributed architecture that the majority gave so much weight in its § 101 analysis does not literally appear in the claims.

    But ultimately, Judge Reyna agreed with the majority's position on the '510 and '984 patents.  His dissenting view is focused on the '065 and '797 patents.

    After a discussion of the patents-in-suit, Judge Reyna noted that "it is apparent that a desired goal, absent structural or procedural means for achieving that goal, is an abstract idea."  While abstract ideas need not be claimed as goals, Judge Reyna believes that the Supreme Court has clearly established that claims directed to no more than aspirational goals are abstract.  Judge Reyna also warned that field-of-use limitations and extra-solution activity are "illusory limitations" that "describe only procedure or structure common to every means of accomplishing a given result, also cannot provide an inventive concept."

    Turning to the patents, Judge Reyna made it clear that the written descriptions of each disclose patent-eligible network monitoring embodiments.  But, citing Synopsys v. Mentor Graphics Corp., he wrote that "the [§ 101] inquiry is not whether the specifications disclose a patent-eligible system, but whether the claims are directed to a patent ineligible concept."  (Arguably, this mischaracterizes Synopsys and the majority to an extent, because the point being made in Synopsys is that arbitrarily complex details from the specification cannot save an otherwise abstract claim, while the majority relied on Enfish for the notion that an improvement described in the specification can be read into the claims.)

    a.  The '065 Patent

    Regarding claim 1 of the '065 patent, Judge Reyna found that it "discusses only very broad, high-level functionality rather than details about how exactly that functionality is implemented, providing no information about the structure of the software," and thus contains no physical or digital structure.  Instead, the claim "defines the program product using only functional limitations" with "no specific process for accomplishing the abstract goal of combining data from two sources."

    Judge Reyna objected to the majority's interpretation of "enhance" to mean applying the claimed functions "in a distributed fashion."  He believes that the latter term has no context in the claims, and the claim fails to specify any components or structure that can be distributed.  Therefore, Judge Reyna would have found claim 1 to be ineligible.

    b.  The '510 Patent

    While Judge Reyna discussed claim 16 of this patent in depth, ultimately he concluded that the claim recites enough detail to be eligible.  Particularly, the claim recites that "the network information is collected from a specific source . . . the distributed system operates on the collected information by applying two specific types of functions – filtering and aggregating [and the] information is further processed by enhancing it in a distributed fashion."  Importantly, claim 16 recites the network devices over which the enhancements take place.

    Thus, like the claims of Enfish and McRO v. Bandai Namco Games, claim 16 is "directed to a particular process that improves upon the manner in which systems collect and process network usage information, and the claimed process is limited in a specific way."  Thus, Judge Reyna agreed with the majority, at least in its conclusion that the claim passes step one of Alice.

    Analysis

    Here we see something of a split in the Federal Circuit.  The majority's decision was driven by looking beyond the plain language of the claims, but relying on construed claim terms to do so, as well as improvements over the prior art discussed in the specifications.  Such an approach is consistent with those of Enfish and McRO, but apparently does not please all judges on the Court.  Particularly, it is unclear whether there are any limits, under § 101, as to how much any alleged improvements from a patent's specification can be read into its claims.

    The majority also took issue with Judge Reyna's position that claiming only an aspirational goal results in patent-ineligible claims.  In response, Judge Plager wrote that:

    [Y]ears ago the Supreme Court outlawed such broad 'ends' or function claiming as inconsistent with the purposes of the Patent Statute.  Congress, however, a few years later softened the rule.  Patentees could write claim language to broadly describe the purpose or function of their invention, and when they did the claim would not cover the bare function or goal, however performed, but only as limited to the particular means (and equivalents) for implementing that function or goal as described by the patentee in the patent's specification.

    This of course refers to means-plus function claiming under § 112 ¶ 6.  While following Judge Reyna's advice and drafting claims that recite specific steps often leads to those claims being better able to withstand a § 101 challenge, there is no absolute requirement to do so.  For instance, the eligible claims in Enfish were in means-plus-function form.

    Regardless, this outcome underlines the importance of claim construction, even in § 101 cases.  A favorable claim construction can tip the patent-eligibility analysis in favor of the patentee, while an unfavorable ruling can doom the subject claims to abstract idea perdition.  Ironically, many district courts have taken the non-precedential advice of Judge Mayer in Ultramercial v. Hulu, and carried out the § 101 analysis prior to construction.  Under 2016 standards, some of the patents invalidated in such a fashion may have had different outcomes.

    Still, despite Enfish, BASCOM, McRO, and this case providing a respite of sorts for patentees by clearing some of the § 101 fog, we are still only one en banc Federal Circuit decision or Supreme Court case away from going back to that murky landscape.

    Amdocs (Israel) Ltd. v. Openet Telecom, Inc. (Fed. Cir. 2016)
    Panel: Circuit Judges Newman, Plager, and Reyna
    Opinion by Circuit Judge Plager; dissenting opinion by Circuit Judge Reyna

  • Strafford #1Strafford will be offering a webinar/teleconference entitled "Patent Design Arounds: Minimizing Risk of Infringement or Reducing Likelihood of Design Arounds — Navigating Claims, Specifications, Prosecution History, Prior Art and Other Key Considerations" on December 1, 2016 from 1:00 to 2:30 pm (EST). Patrick G. Burns of Greer Burns & Crain, and Dale S. Lazar of DLA Piper LLP (US) will provide guidance to patent counsel on how to leverage design arounds to reduce the risk of patent infringement, and also discuss what counsel can do when drafting patent applications to minimize the likelihood that competitors can design around the patent. The webinar will review the following issues:

    • What factors should patent counsel consider when seeking a design around of a valid patent?
    • What steps can patent counsel take when preparing a patent application to reduce the likelihood of design arounds?
    • What role do design arounds play in the context of damages?

    The registration fee for the webinar is $297. Those interested in registering for the webinar, can do so here.

  • IPO #2The Intellectual Property Owners Association (IPO) will offer a one-hour webinar entitled "Launching a Post-Grant Proceeding: In-house Perspective and Strategy" on December 1, 2016 from 2:00 to 3:00 pm (ET). Matthew Cutler, Harness of Dickey & Pierce PLC, David Kelley of Ford Global Technologies LLC, and Kimberly Schmitt of Intel Corp. will consider best practices for in-house counsel regarding the decision to launch an inter partes review (IPR) proceeding against a patent and managing the process of AIA petition and trial. Among the topics to be discussed will be:

    • How to assess the strongest defensive case against the assertion of a patent and when not to launch an IPR;
    • Finding guidance in PTAB statistics;
    • The impact of the Halo and Commil decisions on the decision to launch;
    • Hiring outside counsel and predicting costs;
    • Overseeing the petition, the choice of expert, and the preparation for oral hearing;
    • Whether to file an appeal if you lose.

    The registration fee for the webinar is $135 (government and academic rates are available upon request). Those interested in registering for the webinar can do so here.

  • ThanksgivingThe authors and contributors of Patent Docs wish their readers and families a Happy Thanksgiving.  Publication of Patent Docs will resume on November 26th.

  • By Nicholas Vincent* and Anthony D. Sabatelli** —

    On November 2, 2016, the United States Patent and Trademark Office (USPTO) issued an important and forward-looking memo on Recent Subject Matter Eligibility Decisions for patent applications that offered guidance for drafting claims that may have previously been rendered ineligible under the two-step Alice test for determining patent eligibility (see "USPTO Issues Memorandum on Recent Subject Matter Eligibility Decisions").  The USPTO signaled that this is a further step in a longer and more detailed conversation on patent subject matter eligibility (SME) that will continue in the near future.  We expect this conversation to inform areas ranging from software and computer-implemented inventions to biotechnology.

    The memo and subsequent guidance were fueled by two recent decisions issued by the Federal Circuit:  the McRO decision and the BASCOM decision.  In the McRO decision, the Federal Circuit held that lip synchronization methods were not directed towards an abstract idea, but instead were directed towards an improvement in already existing technology.  As a result, the methods were ruled to be patent eligible under 35 U.S.C. § 101.  In the BASCOM decision, the Federal Circuit vacated an earlier District Court decision that held a computer network filtering system was patent ineligible as a result of incorrectly applying the second step of the two-step Alice test.  Although both cases lie in the software and computing realm, the actions taken by the USPTO in issuing this memo are promising for SME-related issues in various other fields, particularly, biotechnology.  In fact, the memo cites another Federal Circuit decision, Rapid Litigation Management which provided promising guidance for biotechnology inventions and which was the subject of a previous USPTO memo.

    Bolstered by these decisions, the USPTO has continued to update and emphasize the importance of its SME court case guidance chart.  The case chart addresses an important and encouraging aspect of SME-related guidance:  that of precedential decisions vs. non-precedential decisions.  The direct guidance provided by the USPTO through this memo and chart signals a desire to more clearly and effectively unify the resources required to develop novel patent claims with the end goal of achieving eligible claims where they may not have previously existed.  In particular, the USPTO clearly articulates that non-precedential decisions should only be used as justification for the patent eligibility of an application or claim when there exists a particularly unique match between the two that extends beyond simply and generally using the non-precedential case as a means of supporting the eligibility of the claim.

    In addition to providing case guidance on the use of precedential vs. non-precedential decisions in drafting claims, the memo also focuses on particular guidance that has emerged from the recent cases mentioned above.  In the past, claims that may have been deemed ineligible as abstractions, natural phenomena, or laws of nature can now, if they do indeed encompass significantly more than the SME exceptions and are also appropriately drafted, be patent eligible claims.  In particular, the memo focuses on the concept of not oversimplifying a claim and instead focusing on the eligibility of the claim as a whole, rather than on its constituent parts alone.  In the McRO decision, this approach allowed for the patent eligibility of lip-synch technologies because they provided technological improvements and were not mere patent ineligible abstractions.

    Although the McRO and BASCOM decisions focus on the concept of SME in software and computing, the information provided in the USPTO memo and the case chart provide important guidance for SME in biotechnology as well.  This memo provides sound advice that can also be applied to inventions that are arguably directed to laws of nature or natural phenomena (i.e., the first step of the Alice test), which are many times at the heart of inventions in the life sciences.  Furthermore, the Rapid Litigation Management case issued by the Federal Circuit earlier this year is also one of the precedential cases listed in the USPTO case chart.  Similar to the McRO case, the Rapid Litigation Management decision stated that the claims are not directed toward a patent ineligible law of nature, but rather a novel laboratory technique.

    Moving forward, we expect the USPTO memo and chart-based guidance to help in crafting claims that would be more likely to pass the two-step Alice test.  In combination with the future guidance that the USPTO has signaled it will issue, we remain positive with regards to the future of patent eligibility of claims that include individual aspects of abstractions, laws of nature, and natural phenomena.  There is indeed a path forward for the discerning patent practitioner.

    * Nicholas Vincent is a Technology Specialist at Dilworth IP
    ** Dr. Sabatelli is a Partner with Dilworth IP

  • Federal Circuit Finds Another Software Patent Invalid under Section 101

    By Joseph Herndon

    Federal Circuit SealThe U.S. Court of Appeals for the Federal Circuit issued a recent non-precedential decision in a case captioned Tranxition, Inc. v. Lenovo (United States) Inc.

    Tranxition sued Lenovo asserting claims of U.S. Patent Nos. 6,728,877 and 7,346,766.  Shortly thereafter, Tranxition also asserted the patents against Novell, Inc. now known as Micro Focus Software in a separate action.  Lenovo subsequently moved for summary judgment under Rule 56(a) of the Federal Rules of Civil Procedure arguing that all the patented claims were invalid because they were targeted to patent-ineligible subject matter under 35 U.S.C. § 101, and the District Court agreed with Lenovo.

    Tranxition appealed from a final decision of the United States Court for the District of Oregon finding that all claims of the '877 patent and the '766 patent are invalid because they are directed to ineligible subject matter under 35 U.S.C. § 101.

    The Federal Circuit affirmed the District  Court's holding, and held that the claims generally provide instructions to a practitioner on how to transition settings between computers.  The claimed steps were found to merely describe a generic computer implementation, using routine, conventional activities, and thus, the claims were held invalid under 35 U.S.C. § 101.

    Subject Matter of the Patents

    The '877 patent and the '766 patent, which is a continuation of the '877 patent, concern computer system upgrades.  The patents describe that typically, a person's computer system contains many individualized settings, such as email addresses, desktop settings, and stored passwords.  When a computer is replaced, those settings do not appear on the new computer by default.  In order for a replacement computer to behave like its predecessor, consumers must manually "migrate" the settings on the old computer to the new computer, which is a time-consuming process, resulting in user frustration and lost productivity.  The '877 patent and the '766 patent propose to solve these problems by automatically transitioning these settings between computers.  This would provide an advantage over the prior art because it is desirable to provide an automatic migration of configuration settings from an old computing system to a new computing system without using a time consuming manual migration process.

    Claim 1 of the '877 patent is representative of all claims for purposes of the analysis, and is reproduced below.

    1.  A method in a computer system for preparing configuration settings for transfer from a source computing system to a target computing system, the method comprising:
        providing configuration information about configuration settings on the source computing system, the configuration information including a name and location of each configuration setting;
        generating an extraction plan that identifies configuration settings to be extracted from the source computing system, the generating including providing a list of configuration settings known to the source computing system and including identifying active configuration settings out of the provided list of configuration settings to be extracted from the source computing system;
        extracting the active configuration settings of the extraction plan from the source computing system, the extracted configuration settings being located using the provided configuration information;
        generating a transition plan that identifies configuration settings to be transferred from the source computing system to the target computing system, the generating including providing active configuration settings of the extraction plan and including identifying from the active configuration settings of the extraction plan active configuration settings to be transferred from the source computing system to the target computing; and
        for each active configuration setting of the transition plan, retrieving the extracted configuration settings identified as active configuration settings of the transition plan; and
        transitioning one or more of the retrieved configuration settings from a format used on the source computing system to a format used on the target computing system.

    The Federal Circuit outlined the two step process to determine whether a claim is patent-eligible.  First, the court determines whether the claims at issue are directed to a patent-ineligible concept.  Second, if the claims are directed to patent-ineligible subject matter, the court determines if the claims contain an "inventive concept" sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.

    Step One

    Under step one of Alice, the court first determines whether a claim is directed to a patent-ineligible concept.  The Federal Circuit noted that for claims solely implemented on a computer, they have previously found it "relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea," as in Enfish.

    Here, the Federal Circuit stated that it is undisputed that manual migration is an abstract idea.  However, according to Tranxition, the claim is directed to "transitioning" settings from one computer to another, which is a specific software-based solution to a computer-based problem and "exceeds the abstract concept of migration."

    The Federal Circuit was not convinced by this argument.  According to the specification, the patent is directed to solving problems arising out "migration," which was performed manually.  To solve these problems, the patent proposes automatic transitioning of configuration settings as a solution, and explains it is desirable to provide an automatic migration of configuration settings from an old computing system to a new computing system.  The Federal Circuit summarized the stated aim of the patent as automating the migration of data between two computers, which is not sufficient under step one of Alice.

    The Federal Circuit did not find this claim to be directed to an improvement to computer functionality since there is nothing in the claim to suggest that, once settings have been transitioned, the target computer will be any more efficient.  The claim merely "transitions" data from one computer to another, and thus automates the migration process.  As a result, the Federal Circuit found that the claim is directed to the abstract idea of migration, or transitioning, of settings.

    Step Two

    Having determined that the claim is directed to an abstract idea, the Federal Circuit next determined whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application.

    Tranxition argued that the claims contain an inventive concept because a manual process would not necessarily capture all the configuration settings in a computer and that there is no record evidence showing that the automated transition process operates in the same way as a manual process.

    The Federal Circuit noted that although a computer could potentially have dozens, if not hundreds of settings across numerous applications, the claim language only requires one or more configuration settings.  The claim language does not provide a maximum number of settings.

    The Federal Circuit further opined that it is necessarily true that a human might apply an abstract idea in a different manner from a computer, but what matters is the application.  Stating an abstract idea while adding the words "apply it with a computer" will not render an abstract idea non-abstract.

    Here, the claim instructs a practitioner to (1) provide configuration information, (2) generate an extraction plan, (3) extract the configuration settings, (4) generate a transition plan, and (5) transition those settings to a new computer.  The Federal Circuit found that these steps, both individually, and as an ordered combination, do not disclose an inventive concept.  Rather, these steps merely describe a generic computer implementation, using "routine, conventional activities," of the abstract idea, which is insufficient to transform the patent ineligible abstract idea into patent-eligible subject matter.

    Because the Federal Circuit found the claims to be are directed to an abstract idea, and there is no inventive concept present, the claims of the '877 patent and the '766 patent were held to be drawn to patent ineligible subject matter and therefore invalid under 35 U.S.C. § 101.

    Tranxition, Inc. v. Lenovo (United States) Inc. (Fed. Cir. 2016)
    Nonprecedential disposition
    Before Chief Judge Prost and Circuit Judges Reyna and Chen
    Opinion by Chief Judge Prost

  • Federal Circuit Narrows USPTO's Definition of "Covered Business Method"

    By Michael Borella

    Federal Circuit SealThe America Invents Act (AIA) defines a covered business method (CBM) patent as "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions."  For the purpose of determining whether a CBM review is to be instituted, the USPTO's Patent Trial and Appeal Board (PTAB) considers "whether the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity."  Perhaps it was only a matter of time before these two competing definitions ended up butting heads with one another before the Federal Circuit.

    Unwired Planet owns U.S. Patent No. 7,203,752, which is directed to restricting access to a wireless device's location information.  Particularly, a user of such a wireless device may specify "privacy preferences that determine whether client applications are allowed to access their device's location information."  A server is used as a clearinghouse for requests of the location information.  Notably, "a client application will submit a request over a data network to the system requesting location information for an identified wireless communications device," and "[t]he system then determines, based on the user's privacy preferences, whether to provide the requested location information to a client application."

    Claim 25 of the '752 patent was deemed representative:

    A method of controlling access to location information for wireless communications devices operating in a wireless communications network, the method comprising:
        receiving a request from a client application for location information for a wireless device;
        retrieving a subscriber profile from a memory, the subscriber profile including a list of authorized client applications and a permission set for each of the authorized client applications, wherein the permission set includes at least one of a spatial limitation on access to the location information or a temporal limitation on access to the location information;
        querying the subscribe[r] profile to determine whether the client application is an authorized client application;
        querying the subscriber profile to determine whether the permission set for the client application authorizes the client application to receive the location information for the wireless device;
        determining that the client application is either not an authorized client application or not authorized to receive the location information; and
        denying the client application access to the location information.

    On April 8, 2014, the PTAB instituted CBM review of claim 25, as well as other claims of the patent.  In doing so, the PTAB found that:

    The '752 patent disclosure indicates the "client application" may be associated with a service provider or a goods provider, such as a hotel, restaurant, or store, that wants to know a wireless device is in its area so relevant advertising may be transmitted to the wireless device.  Thus, the subject matter recited in claim 25 of the '752 patent is incidental or complementary to the financial activity of service or product sales.  Therefore, claim 25 is directed to a method for performing data processing or other operations used in the practice, administration, or management of a financial product or service.

    In its April 6, 2015 final written decision, the PTAB held that the challenged claims were patent-ineligible under 35 U.S.C. § 101.  Unwired Planet appealed.

    The gist of Unwired Planet's arguments was that the PTAB applied a broader standard than what is set forth in the AIA when determining whether the '752 patent was a CBM patent.  Particularly, claim 25 did not recite a financial product or service, but the PTAB looked to disclosure in the patent's specification on how to monetize the invention.

    The Federal Circuit observed that the USPTO adopted the narrower statutory definition of CBM patents without alteration, and did not use its rulemaking authority to further refine this definition.  Further, the PTAB did not apply the statutory definition, but instead used the more extensive designation of "whether the patent claims activities that are financial in nature, incidental to a financial activity, or complementary to a financial activity."

    In the PTAB's view, the specification's discussion of "client applications [that] may be service or goods providers whose business is geographically oriented [such as a] hotel, restaurant, and/or store" was determinative, because "[t]hese businesses may wish to know a wireless device and its user are nearby so that 'relevant advertising may be transmitted to the wireless communications device.'"  Relying on this statement, the PTAB found claim 25 to recite subject matter "incidental or complementary to potential sales resulting from advertising."

    The Court considered the origin of the "incidental or complementary to" language.  The USPTO derived these terms from a statement made by Senator Schumer during the Senate's deliberation on the AIA's statutory definition of a CBM patent.  But the Court pointed out that this quote was just one floor comment that was not representative of the legislative history.  Notably, Senator Durbin took a different view on the scope of CBM patents.  Ultimately, the Court held that "the legislative history cannot supplant the statutory definition actually adopted," and in any event "the views of a single legislator, even a bill's sponsor, are not controlling."  Further, the USPTO did not adopt this general policy statement through its rulemaking procedures and regardless was not permitted to "adopt regulations that expand its authority beyond that granted by Congress."

    Drilling that point home, the Court provided examples of inventions that, although not being financial in nature, could be categorized as covered business methods under the USPTO's definition:

    The patent for a novel lightbulb that is found to work particularly well in bank vaults does not become a CBM patent because of its incidental or complementary use in banks.  Likewise, it cannot be the case that a patent covering a method and corresponding apparatuses becomes a CBM patent because its practice could involve a potential sale of a good or service.  All patents, at some level, relate to potential sale of a good or service.

    Consequently, the Court held that the PTAB's "reliance on whether the patent claims activities incidental to or complementary to a financial activity as the legal standard to determine whether a patent is a CBM patent was not in accordance with law," vacated the PTAB's decision, and remanded the case back to the PTAB for further proceedings.  There is no doubt that this ruling has made it more difficult for challengers to establish the necessary grounds for CBM institution.

    Unwired Planet, LLC v. Google Inc. (Fed. Cir. 2016)
    Panel: Circuit Judges Reyna, Plager, and Hughes
    Opinion by Circuit Judge Reyna