post-alice guideline 2016

Nutter McClennen & Fish LLP

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Post-Alice Guideline

Lewis J. Lee

April 13, 2006

Before Alice Corp v. CLS Bank

35 U.S.C.§101

• Whoever invents or discovers any new and useful process, machine,

manufacture, or composition of matter, or any new and useful

improvement thereof, may obtain a patent therefor, subject to the

conditions and requirements of this title.

“include anything under the sun that is made by man“

• 1952 Patent Act Committee Report

2-Part Eligibility Test (Mayo-test)

• Determine if claim is directed to an exception

(a) law of nature, (b) natural phenomena, and (c) abstract idea

• Then, determine if additional elements “transform the nature of the

claim” into a patent eligible application, individually and /or as an

ordered combination

Nutter McClennen & Fish LLP • www.nutter.com 2

Alice Corp v. CLS Bank

U.S. Supreme Court (USSC), June 19, 2014 (9-0)

• Invalidated patent claims about the intermediated settlement

USSC holds that the claims of the patent:

• are drawn to the abstract idea of intermediated settlement;

• merely require generic computer implementation; and

• fail to transform the abstract idea into a patent eligible invention.

Two Parts Test

1) Determine whether claims are directed to an exception

2) If yes, determine whether there is an “inventive concept” – element

or combination of elements that is sufficient to ensure that the

patent claim is “significantly more” than the abstract idea

Aftermath of Alice Decision

After Alice decision

• USPTO established 2-part analysis for abstract idea

• Seeing more 101 rejections being tagged an 'abstract idea'

• Courts and PTAB applying Alice decision to invalidate claims


Impact of Alice to the Court

Before and After in District Court

Post-Alice Decisions (6/14-3/16, 21 mos)

Invalid Not Invalid Total Invalid (%)

Before 37 52 89 42%

After 147 75 222 66%

before (4/13-6/14), after (6/14-3/16)

Total Invalid % Invalid

Fed. Ct. 253 177 70.0%

Fed. Cir. 31 30 96.8%

Dist. Ct. 222 147 66.2%

PTAB CBM Institutions 114 96 84.2%

PTAB CBM Final 58 57 98.3%

* Data Source: Bilski Blog, Robert R. Sachs, Fenwick & West

Impact of Alice to the USPTO

§101 Rejections by Classification

§101 Rejections for Biz. Methods


0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

45.00%

1600-Bio, Genes & Chem

1700-Chemical Material Eng.

2100-Computer Architecture

2400-Networks, Video

2600-Communications

2800-Semicon, Elect.

3600-Trans, Const, BM

3700-Mechanical

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

Jan-12 Oct-12 Aug-13 May-14 Jul-14 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15

3680

3690

* Data Source: Bilski Blog, Robert R. Sachs, Fenwick & West

Subject Matter Eligibility Flowchart


Step 1

Is the claim a

process, machine,

manufacture, or

composition of

matter?

Step 2A

A law of nature, a

natural phenomenon,

or an abstract idea?

(judicial exceptions)

Step 2B

Does the claim recite

additional elements

that amount to

“significantly more”

than the exception?

Eligible

Subject Matter

Not Eligible

Subject Matter

Yes

Yes

Yes

No

No

No

“Abstract Idea” in Alice decision

The Alice Court did not provide a definition of an

“abstract idea,” but

Appears to limit the “abstract idea” to be:

• A fundamental and long prevalent, and

• Well-known and widely used for long years.

• Such as, hedging or intermediated settlement

Hint #1: Distinguish from Alice-“abstract idea”

• Argue that the subject matter of the invention is relatively new

and/or confined to a specific technological field

• Argue that the invention provides a practical use

“Abstract Idea”?

Fundamental Economic Practices

Certain Methods of Organizing Human Activity

An Idea ‘of Itself’

• “can be performed in the human mind, or by a human using a pen

and paper.”

Mathematical relationships/formulas

Routine, Conventional, Well-known

General Computer + Software

• Considered as an abstract idea – almost always !

No bright line rule!


* red color types from USPTO guideline

December 2014 USPTO

Interim Eligibility Guideline (1)

If claim includes an abstract idea, determine whether

any claim element(s) is enough to make the claim

“significantly more” than the abstract idea itself

May be enough to include:

• Improvements to another technology or technical fields

• Improvements to the functioning of the computer

• Applying a judicial exception to a particular machine

• Transforming an article to a different state or thing

• Adding unconventional limitations that confine the claim to a

particular useful application


December 2014 USPTO

Interim Eligibility Guideline (2)

May be not enough to include:

• Merely implementing an abstract idea on a computer

• Applying well-understood routines or conventional activities to a

judicial exception (e.g., a claim to an abstract idea requiring no more

than a generic computer to perform generic computer functions that

are well understood, routine and conventional activities previously

known to the industry)

• Adding insignificant extrasolution activity to a judicial exception

(e.g., mere data gathering in conjunction with a law of nature or

abstract idea)


July 2015 Update on

Eligibility Guideline

Emphasis on considering all elements both individually

and in combination

MDC (markedly different characteristics) analysis stays

in Step 2A

Further information (i.e., court decisions) on

Identifying Abstract Ideas in Step 2A

Refine requirements of A Prima Facie Case

Highlight using the 2014 Interim Eligibility Guidance

Preemption and streamlined analysis

• “the absence of complete preemption does not guarantee that a claim

is eligible.”


Notable Court Decisions after Alice

Ultramercial v. Hulu (Nov. 14, 2014 @ U.S. App.)

DDR Holdings v. Hotels.com (Dec. 5, 2014 @ U.S. App.)

Allvoice Devs. v. Microsoft Corp (May 22, 2015, U.S. App.)

Internet Patents v. Active Network (Jun. 3, 2015, U.S. App.)

Klaustech v. Admob (Aug. 31, 2015, D. N. Cal. )

eDekka v. 3Balls.com (Sep. 21, 2015, D. E. Tex.)

Recognicorp v. Nintendo (Dec. 15, 2015, D. WA)


‘More’ is not Enough

Ultramercial v. Hulu (Nov. 14, 2014 @ U.S. App.)

• Patent No. 7,346,545 relates to methods for advertising including

restricting access to a media product for a consumer until seeing a

sponsor message and receive payment from the sponsor.

• Claim 1 comprises 11 details steps to describe interactions among

content provider, content distributor, consumer, and sponsor.

• Court invalidated ‘545 patent – not transformative

Hint #2: Just adding more stuffs does not guarantee

• Addition of a general computer and the Internet or a large number of

steps are not enough.

• “[A]ddition of merely novel or non-routine components to the

claimed idea” does not necessarily turn “an abstraction into

something concrete.” (Ultramercial at p.10)


eDekka v. 3Balls.com

Claim 1 of US 6,266,674

1. Method for storing information provided by a user which comprises:

in response to user input, receiving and storing information;

in response to user input, designating the information as data while

the information is being received;

in response to user input, designating at least a portion of the

information as a label while the information is being received;

in response to user input, traversing a data structure and providing

an indication of a location in the data structure;

in response to user input, storing the label at the location in the data

structure; and

associating the label with the data.


“Could be performed by a human”

eDekka v. 3Balls.com (Sep. 21, 2015, Dist. E Tex)

• eDekka contended that the claims are not an abstract idea because

they “improve the functioning of technology. . . . because it creates a

structure that reduces the time to retrieve information and the amount

of information that must be retrieved.”

• However, the Court found that representative claims 1 and 3 are

directed to an abstract idea of storing and labeling information.

• “[T]he claimed idea represents routine tasks that could be performed

by a human.”

Hint #3: Actual improvement is required

• Arguing improvements over the technology is not enough.


Is Software an Abstract Idea?

DDR Holdings v. Hotels.com (Dec. 5, 2014 @ U.S. App.)

• Patent 7,818,399: When a link is activated in a web browser, where

the link is associated with a commerce object, pull related

information from a storage, generate a page about the commerce

object, and transmit the generated page to the web browser.

• “[T]he claimed solution is necessarily rooted in computer technology

to overcome a problem specifically arising in the realm of computer

networks” (DDR at p. 20)

• Hardware in ‘399 claims is just a general computer. Still the court

found the claims patent-eligible.

Hint #4: The type of problem to solve matters.

• Improvements to a technology, a technical field, or the functioning of

the computer itself may be enough to be eligible.

Following DDR Holdings

Klaustech v. Admob (Aug. 31, 2015, Dist. N Cal. )

• Patent 6,128,651

– a non-scrolling ad display that provides a web page with a non-scrolling

ad frames where each ad frame has its own timer. Identity for the

browser and ad, and the timer timeout are recorded.

• Patent-eligible, similar to DDR Holdings

– “The patent attempts to address the prevailing problem of advertising on

the Internet to control advertising to each web page viewing browser and

to monitor accurately the timing of the display, with proof of the

advertisement display to the paying advertiser.”

• Note: consideration of patent eligibility pursuant to a motion to

dismiss should be limited to those cases where “the basic character

of the claimed subject matter is readily ascertainable from the face of

the patent.”


The Eligibility is in the Details

Internet Patents v. Active Network (Jun. 3, 2015, U.S. App.)

• Patent 7,707,505: An intelligent user interface that generates a web

page furnishing icons, where each icon is a hyperlink to a dynamic

online application form. The state of the dynamic online form is

determined by a user input.

• “[A] known idea, or one that is routine and conventional, is not

inventive in patent terms.” Invalid

Hint #5: Incorporate the details

• A well-known method that lacks the details of how the invention

executes its functions is not patent-eligible.

• DDR claimed an improvement to a computer networks and described

its workings in great detail.


One of the Four, not Something Else

Allvoice Devs. v. Microsoft Corp (May 22, 2015, U.S. App.)

• Claim 60. A universal speech-recognition interface . . . comprising:

input means for receiving speech-recognition data . . .;

output means for outputting the recognised words . . . .

• Invalidated claims 60 and 63 without using Alice 2 part analysis

• The Court found that the subject matter does not fall in the four

statutory categories, since “except for process claims, the eligible

subject matter must exist in some physical or tangible form.”

Hint #6 : Process? If not, use a tangible form

• The claims could be written in a processor configured to:

• For non-method claims, always include some form of physical

hardware.


Tweak to DDR Holdings

Recognicorp v. Nintendo (Dec. 15, 2015 W. Dist. WA)

• US 8,005,303 relates to methods and systems for encoding and

decoding image data. The method includes creating an image of a

face on a display by piecing together images of facial features (such

as hair or eyes), calculating a code for the composite image, and

reproducing that image on another display based on that code.

• Even though the invention tries to overcome problems specific to the

computer technologies, encoding/decoding and multiplication are not

enough to transform the subject to be patent-eligible.

• Note: The Court confirmed that claim construction is not “an

inviolable prerequisite to determining patent eligibility.”

Solving “a problem in computer networks” is not

enough to be patent-eligible.


USPTO Example #1: Isolating and

Removing Malicious Code from e-mail

1. A method, comprising:

receiving an electronic communication containing malicious code in a

computer having a quarantine sector and a non-quarantine sector isolated from

the quarantine sector:

storing the communication in the quarantine sector where code in the

quarantine sector is prevented from performing write actions in other memory

sectors;

extracting the malicious code from the electronic communication to create a

sanitized electronic communication, wherein the extracting comprises:

scanning the communication for a beginning malicious code marker;

flagging each scanned byte between the beginning marker and a successive

end malicious code marker

copying all non-flagged date bytes in a sanitized communication file

transferring the sanitized electronic communication to the non-quarantine

sector and deleting all data remaining in the quarantine sector.


PTO Analysis of Example #1

Step 1: Directed to a statutory category of invention?

Yes. The claim is directed to a process.

Step 2A:

No. The claim is directed towards physically isolating a received

communication on a memory sector and extracting malicious code

from that communication to create a sanitized communication in a new

data file. Such action does not describe an abstract concept, or a

concept. In contrast, the invention claimed here is directed towards

performing isolation and eradication of computer viruses, worms, and

other malicious code, a concept inextricably tied to computer

technology and distinct from the types of concepts found by the courts

to be abstract. Accordingly, the claim is not directed to any judicial

exception


USPTO Example #3:

Digital Image Processing

1. A computer-implemented method for halftoning a gray scale image,

comprising:

generating a blue noise mask by encoding changes in pixel values;

storing the blue noise mask in a first memory;

receiving a gray scale image and storing the gray scale image in a

second memory;

comparing with a processor on a pixel-by-pixel basis, each pixel of

the gray scale image to a threshold number in the corresponding

position of the blue noise mask to produce a binary image array; and

converting the binary image array to a half-toned image.




Yes. The claim is directed to a process.

Step 2A: Directed to a judicial exception?

Yes. The process includes encoding, storing data into a memory, and

comparing data, which are considered abstract. Therefore, the claim is directed

to an abstract idea.

Step 2B: Amounts to significantly more than the exception?

Yes. The steps of comparing blue noise mask to a gray scale image to

transform the gray scale image to a binary image and converting the binary

image array into a half-toned image add meaningful limitations to the abstract

idea of digital image processing and therefore “adds significantly more” to the

abstract idea (beyond mere computer implementation).

Also, the method improves the functioning of the computer by allowing the

computer to use less memory, which results in faster computation time.


USPTO Example #5:

Digital Image Processing

10. A method of generating a device profile that describes properties of

a device in a digital image reproduction system for capturing,

transforming or rendering an image, said method comprising:

generating first data for describing a device dependent transformation

of color information content of the image to a device independent color

space through use of measured chromatic stimuli and device response

characteristic functions;

generating second data for describing a device dependent

transformation of spatial information content of the image in said device

independent color space through use of spatial stimuli and device

response characteristic functions; and

combining said first and second data into the dev vice profile.




Yes. The claim is directed to a statutory category, because a series of steps for

generating data satisfies the requirements of a process (a series of acts).


Yes. the claimed method simply describes the concept of gathering and

combining data by reciting steps of organizing information through

mathematical relationships.


No. The claim does not include additional elements beyond the abstract idea

of gathering and combining data. Therefore, the claim does not amount to

significantly more than the abstract idea itself.


USPTO Example #21-1:

Transmission of Stock Quote Data

1. A method of distributing stock quotes over a network to a remote subscriber

computer, the method comprising:

receiving stock quotes at a transmission server sent from a data source over the

Internet, the transmission server comprising a microprocessor and memory that

stores the remote subscriber’s preferences for information format, destination

address, specified stock price values, and transmission schedule, wherein the

microprocessor

filters the received stock quotes by comparing the received stock quotes to the

specified stock price values;

generates a stock quote alert from the filtered stock quotes that contains a stock

name, stock price and a universal resource locator (URL), which specifies the

location of the data source;

formats the stock quote alert into data blocks according to said information

format; and

transmits the formatted stock quote alert to a computer of the remote subscriber

based upon the destination address and transmission schedule.


PTO Analysis of Example #21-1


Yes. The claim recites a series of acts for distributing stock quotes to selected

remote devices. Thus, the claim is directed to a process, which is one of the

statutory categories of invention .


Yes. The claim recites the steps of receiving, filtering, formatting and

transmitting stock quote information. This is simply the organization and

comparison of data which can be performed mentally and is an idea of itself.


No. The claim recites additional limitations of a microprocessor, memory and

transmitter. However they are to simply perform the generic computer

functions of receiving, processing and transmitting information. Generic

computers performing generic computer functions, alone, do not amount to

significantly more than the abstract idea.


USPTO Example #21-2:

Transmission of Stock Quote Data

2. A method of distributing stock quotes over a network to a remote subscriber computer, the method

comprising:

providing a stock viewer application to a subscriber for installation on the remote subscriber computer;

receiving stock quotes at a transmission server sent from a data source over the Internet, the

transmission server comprising a microprocessor and a memory that stores the remote subscriber’s

preferences for information format, destination address, specified stock price values, and transmission

schedule, wherein the microprocessor

filters the received stock quotes by comparing the received stock quotes to the specified stock price

values;

generates a stock quote alert from the filtered stock quotes that contains a stock name, stock price and

a universal resource locator (URL), which specifies the location of the data source;

formats the stock quote alert into data blocks according to said information format; and

transmits the formatted stock quote alert over a wireless communication channel to a wireless device

associated with a subscriber based upon the destination address and transmission schedule,

wherein the alert activates the stock viewer application to cause the stock quote alert to display on the

remote subscriber computer and to enable connection via the URL to the data source over the Internet

when the wireless device is locally connected to the remote subscriber computer and the remote

subscriber computer comes online.


PTO Analysis of Example #21-2


Yes. The claim recites a series of acts for distributing stock quotes to selected

remote devices. Thus, the claim is directed to a process, which is one of the

statutory categories of invention .


Yes. The claim recites the steps of receiving, filtering, formatting and

transmitting stock quote information. This is simply the organization and

comparison of data which can be performed mentally and is an idea of itself.


Yes. The claimed invention addresses the Internet‐centric challenge of alerting

a subscriber with time sensitive information when the subscriber’s computer is

offline. This is addressed by transmitting an alert to activate the stock viewer

application, which causes the alert to display and enables the connection of the

remote subscriber computer to the data source over the Internet when the

remote subscriber computer comes online.


USPTO Example #24:

Updating Alarm Limits

1. A method for updating the value of at least one alarm limit on at least one

process variable involved in a process comprising the catalytic chemical

conversion of hydrocarbons wherein said alarm limit has a current value of B0+K

wherein B0 is the current alarm base and K is a predetermined alarm offset which

comprises:

(1) Determining the present value of said process variable, said present value

being defined as PVL;

(2) Determining a new alarm base B1, using the following equation:

B1= B0(1.0‐F) + PVL(F)

where F is a predetermined number greater than zero and less than 1.0;

(3) Determining an updated alarm limit which is defined as B1+K; and

thereafter

(4) Adjusting said alarm limit to said updated alarm limit value.




Yes. Thus, the claim is directed to a process, which is one of the statutory

categories of invention .


Yes. The limitations of updating alarm limits using a formula is a judicial

exception, because mathematical relationships have been characterized by the

courts as abstract ideas, even though the formula is novel.


No. The preamble specifies the field of use, which is catalytic conversion of

hydrocarbons, but in this case imposes no limits on the process of calculating

an alarm limit value using the specified equation. Without explaining how to

select variables, set off an alarm, or adjust the alarm limit, the steps merely

calculate a result using a novel equation and do not add any meaningful limits

on use of the equation.


HINTS AND TAKEAWAYS (1)

Add specific technical limitations to the claims

• Draft claims to show improvement to the functioning of a computer, or

general purpose computer is configured into a specific purpose computer

Distinguish from Alice-“abstract idea”

• Argue that the subject matter of the invention is relatively new and/or

confined to a specific technological field.

• Argue claims provide improvement to the technical field to which the claims

are applied.

• If possible, argue that claims could not be performed without the specialized

components of the claims.

Do not leave critical features in dependent claims

• When an independent claim is invalidated, the Court routinely invalidates its

dependent claims also.


HINTS AND TAKEAWAYS (2)

Draft specifications and claims so that they are clearly directed to a

technical solution to a technical problem

Draft application with full and deep technical details

• Use technical terms in claim, as opposed to business method terms (e.g., use

“multimedia content file” instead of “advertisement”).

• Always include hardware support in the specification.

• Improvements to a technology, a technical field, or the functioning of the

computer itself may be enough to be eligible.

Avoid pure functional claims – incorporate some form of hardware

(e.g., a processor or a memory)

Request to consider all elements both individually and in

combination

Discuss with the Examiner – Interview Helps !


Reference

USPTO 2014 Interim Guidance of Patent Subject

Matter Eligibility

USPTO July 2015 Update on Subject Matter

Eligibility

Bilski Blog, Robert R. Sachs, Fenwick & West

Patent Eligibility Post-Alice: Practical Advice for

Navigating the Current 35 USC §101 Regime

- AILPA Seminar on Jan. 20, 2016

Info

Nutter McClennen & Fish

Lewis J. Lee

[email protected]

BACKUP SLIDES


Alice Guideline:

2-Part Analysis for Abstract Idea

Step 1: Perform the statutory category test

• If a claim is not directed to one of the four statutory categories (i.e., process, machine, manufacture, or composition of matter), reject the claim

Step 2A: Determine whether the claim is directed to an abstract idea

• Examples: fundamental economic practices, certain methods of organizing human activities, an idea itself, or mathematical formula

Step 2B: If so, determine whether the claim amounts to “significant more” than the abstract idea itself

• Improvements to another technology or technical fields;

• Improvements to the functioning of the computer itself; or

• Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment7

post-alice guideline 2016

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