Post Alice Aftermath – The Death of Hundreds of Thousands of Patentswebcasts.acc.com/handouts/9.9.15_IPC_Slides_ACC_.pdf · · 2015-09-08Post Alice Aftermath – The Death of

© 2013 Kilpatrick Townsend

Post Alice Aftermath – The Death of Hundreds of Thousands of Patents Patrick Jewik Partner September 9, 2015

ATTORNEY CLIENT PRIVILEGED / CONFIDENTIAL

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Alice Corp v. CLS Bank (June 19, 2014)

“if all of these claims, including the system claims, are not patent eligible, this case is the death of hundreds of thousands of patents, including all business method, financial system, and software patents as well as many computer implemented and telecommunications patents.” - J. Moore

Roadmap

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•  Introduction •  The aftermath of Alice in the courts •  The aftermath of Alice in the USPTO •  The USPTO’s current Alice test •  Conclusions and thoughts on dealing with Alice

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Patentable Subject Matter

•  35 U.S. Code § 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.

•  Exception –  “Laws of nature, natural phenomena, and abstract ideas are

not patentable.” Association for Molecular Pathology v. Myriad Genetics, Inc.

•  Rationale –  Patent law should not inhibit ingenuity by allowing broad

claims directed only to the “building blocks of human ingenuity” so as to “tie up” the use of the underlying ideas

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•  Invention related to a computerized method for mitigating settlement risk using a computer as a third party intermediary

•  All claims (including method and system claims) were held invalid under 35 U.S.C. 101 as being “abstract”

•  Written by J. Thomas –  9-0 Decision –  “[w]e need not labor to delimit the precise

contours of the ‘abstract ideas’ category in this case”

Alice Corp v. CLS Bank (June 19, 2014)

•  (a) Zero •  (b) Less than 10 percent •  (c) Between 10 and 50 percent •  (d) Between 50 and 90 percent •  (e) Above 90 percent •  (f) One hundred percent

What percentage of cases challenged under Section 101 have been found valid by the Federal Circuit after Alice?

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7

1

10

Federal Circuit Decisions

Not Abstract Significantly More Invalid

Federal Circuit Decisions

DDR Holdings vs. Hotels.com

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4

11

54

District Court Decisions


District Court Decisions

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9 9

186

PTAB Decisions


PTAB Decisions

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USPTO - Alice Timeline

•  June 19, 2014: Alice Corp. v. CLS •  December 10, 2014: Interim Guidance on Patent Subject

Matter Eligibility •  January 27, 2015: Abstract Idea Examples •  July 2015: More Examples in response to Public

Comments on December 10, 2014 Interim Guidance

Status of cases withdrawn from Allowance due to Alice Decision - Patently-O (February 25, 2015)

PTO’s Eligibility Guidelines Test Structure

(Step 2A) - [PART 1 Mayo test] –  IS THE CLAIM DIRECTED TO A LAW

OF NATURE, A NATURAL PHENOMENON, OR AN ABSTRACT IDEA ( JUDICIALLY RECOGNIZED EXCEPTIONS) ?

(Step 2B) - [PART 2 Mayo test] –  DOES THE CLAIM RECITE

ADDITIONAL ELEMENTS THAT AMOUNT TO SIGNIFICANTLY MORE THAN THE JUDICIAL EXCEPTION?

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Three Types of Art Units

Art Units Have Different Approaches to Evaluation of 101 Issues:

1.  Minimal Scrutiny •  Microchips – 2183

–  ELECTRICAL COMPUTERS AND DIGITAL PROCESSING SYSTEMS: PROCESSING

2.  Heightened Scrutiny 3.  Apparent Presumption Against

•  Art Unit 362X – DATA PROCESSING –  3628: DATA PROCESSING: FINANCIAL, BUSINESS

PRACTICE, MANAGEMENT, OR COST/PRICE DETERMINATION

–  Organization of human activity

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•  Determine whether the claim is “directed to” a law of nature, natural phenomena, or an abstract idea –  “Directed to” means that the exception is recited in the claim –  Example: “A machine comprising elements that operate in

accordance with F=ma” –  F=ma is a law of nature is the claim is therefore “directed to”

an exception

•  If yes, then proceed to Step 2B to analyze whether the claim as a whole amounts to significantly more than the exception

Step 2A – Abstract Idea Test

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•  Streamlined analysis –  If the claim recites an exception, but when reviewed as a

whole, clearly does not seek to “tie up” the exception, a “streamlined analysis” is used

•  Such claims may recite an exception, but their eligibility will be self-evident, so no detailed analysis is required

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•  The USPTO may narrowly characterize the “abstract idea” –  Consider Step 2B and don’t let examiner define identified

“abstract idea” too narrowly EXAMPLE: Ex Parte Cote (Held Invalid, Appeal 2012-010730 (PTAB Sept. 3, 2014, App. S/N 12/352,538))

a method of using clusters in electronic design automation, the method comprising: receiving data for a plurality of bins, each bin including a plurality of clusters, each cluster representing

a plurality of shapes in an original layout, the plurality of shapes having a proximity to each other determined by a grow operation; and

using a computer, preparing a phase shifting layout for the original layout by phase shifting each of the plurality of clusters independently of one another.

Examiner Abstract Idea: “independently phase shifting each of a plurality of clusters which each represent a plurality of shapes having a proximity to each other determined by a grow operation.” With such a narrowly defined abstract idea, what’s left that could be “significantly more?”

Why isn’t the abstract idea in Cote “automating electronic design?” 15


•  Arguments traversing the “abstract idea” allegation –  Argue abstract idea is not easily identifiable, like DDR

•  CAFC: “[I]dentifying the precise nature of the abstract idea is not as straightforward.” (DDR)

–  Argue any identifiable ideas are not comparable to the judicially recognized ineligible ideas

–  Argue that that the Examiner has provided an insufficient basis for alleging that the alleged abstract idea is old and well known

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Which of the following are abstract ideas?

•  (a) Managing a game of bingo •  (b) Arrhenius equation for calculating the cure time of

rubber •  (c) Lip synchronization using a rules-based morph

target approach •  (d) Both (a) and (b) •  (e) All of the above

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•  Mitigating risk settlement (Alice) •  Hedging (Bilski) •  Creating a contractual relationship (buySAFE) •  Using advertising as a currency (Ultramercial) •  Processing information through a clearinghouse

(Dealertrack) •  Comparing new and stored information using rules to

identify options (Smartgene) •  Using categories to organize, store, and transmit

information (Cyberfone) •  Organizing information through mathematical

correlations (Digitech)

Examples of abstract ideas

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Examples of abstract ideas

•  Managing a game of bingo (Planet Bingo) •  Arrhenius equation for calculating the cure time of

rubber (Diehr) •  Formula for updating alarm limits (Flook) •  Mathematical formula for standing wave phenomena

(Mackay Radio) •  Mathematical procedure for converting one number to

another (Benson)

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•  Determine whether any element or combination of elements in the claim amounts to significantly more than the judicial exception

Step 2B – “Significantly More” Test

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•  Limitations that may be enough to qualify as “significantly more” when recited in a claim with a judicial exception (Fed. Reg. Dec. 16, 2014) –  Improvements to another technology or technical field –  Improvements to the functioning of the computer itself –  Applying the judicial exception with, or by use of, a particular

machine –  Effecting a transformation or reduction of a particular article to a

different state or thing –  Adding a specific limitation other than what is well-understood,

routine and conventional in the field, or adding unconventional steps that confine the claim to a particular useful application

–  Other meaningful limitations beyond generally linking the use of the judicial exception to a particular technological enviroment


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•  Limitations that are not enough to qualify as “significantly more” (Fed. Reg. Dec. 16, 2014) –  Adding the words “apply it” with the judicial exception, or mere

instructions to implement an abstract idea on a computer –  Appending well-understood, routine and conventional activities

previously known to the industry –  Adding insignificant extra-solution activity –  Generally linking the use of the judicial exception to a particular

environment


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Applying the Test – DDR Holdings

•  DDR Holdings v. Hotels.com (Fed. Cir. 2014) –  Claim was directed to an outsource provider that coordinated

the serving of web pages from web page owners wherein the web pages have links to merchants (a business purpose)

–  Step 2A (abstract idea?) •  Opponent alleged that the abstract idea was “making two web

pages look the same,” “syndicated commerce on the computer using the Internet,” or “making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes, and layouts.”

•  CAFC said that it was not straightforward to identify the abstract idea; not necessary to identify because Step 2B was satisfied

–  Step 2B (yes, significantly more) •  Not merely performing some “pre-Internet” business practice •  Claimed solution is necessarily rooted in computer technology to

overcome a problem arising in the realm of computer networks 23

•  The Alice / Mayo test is not a business method exclusion –  “Section 101 similarly precludes a reading of the term

‘process’ that would categorically exclude business methods.” Bilski

–  “If enough extra is included in a claim, it passes muster under section 101 even if it amounts to a ‘business method.’” buySAFE vs. Google

What does this mean?

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•  Lots of patents are being invalidated under Alice •  Application of the Alice test has been extremely

inconsistent in the Courts and the USPTO •  The Supreme Court and the CAFC are improperly

mixing anticipation, obviousness, and patent eligibility –  The courts are now requiring an “inventive concept” in order for a

claim to be patent eligible

•  A claim is more likely to be patent eligible if it is narrower and more inventive

•  Sit tight and wait for the CAFC produce more opinions that identify patents that are eligible

•  Interview frequently to determine the Examiner’s interpretation of 35 USC 101

Conclusions and thoughts moving forward

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•  Alice Corp. v. CLS Bank (June 2014) •  Digitech Image Technologies v. Buy.com (July 2014) •  Planet Bingo v. VKGS (August 2014) •  Buysafe v. Google (September 2014) •  Ultramercial v. Hulu (November 2014) •  DDR Holdings v. Hotels.com (December 2014) •  Content Extraction v. Wells Fargo (December 2014)

Examples of Post Alice Federal Circuit Cases Invalidating Claims

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•  Invention: The invention relates to a device profile that describes the color properties of a source device (camera) and a destination device (printer or display) so that distortion is minimized.

•  Abstract idea: “organizing ideas through mathematical correlations” •  Comments: •  The Federal Circuit stated “[t]he claim generically recites a process of combining two data

sets into a device profile; it does not claim the processor’s use of that profile in capturing, transforming, or rendering a digital image.”

•  Independent claim 18 was a system claim with “means plus function” limitations, so the hardware structure should have been incorporated into the claim.

•  Device Claim: •  1. A device profile for describing properties of a device in a digital image reproduction

system to capture, transform or render an image, said device profile comprising: •  first data for describing a device dependent transformation of color information content of

the image to a device independent color space; and •  second data for describing a device dependent transformation of spatial information content

of the image in said device independent color space.

Digitech Image Technologies, Inc. v. Buy.com (invalid; 7-2014)

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•  Invention: Computer aided method for managing a game of bingo. There were many different claim sets. One claim set claims a computerized method for managing a bingo game allowing a player to repeatedly play the same numbers for multiple sessions.

•  Abstract idea: “managing a game of bingo” and “solving a tampering problem and also minimizing other security risks during bingo purchases”

•  Comments: •  Adding a computer to an old idea is insufficient

Planet Bingo v. VKGS (invalid; 8-2014)

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•  Claim: •  1. A system for managing a game of Bingo which comprises: •  (a) a computer with a central processing unit (CPU) and with a memory and with a printer

connected to the CPU; •  (b) an input and output terminal connected to the CPU and memory of the computer; and •  (c) a program in the computer enabling: (i) input of at least two sets of Bingo numbers which

are preselected by a player to be played in at least one selected game of Bingo in a future period of time; (ii) storage of the sets of Bingo numbers which are preselected by the player as a group in the memory of the computer; (iii) assignment by the computer of a player identifier unique to the player for the group having the sets of Bingo numbers which are preselected by the player wherein the player identifier is assigned to the group for multiple sessions of Bingo; (iv) retrieval of the group using the player identifier; (v) selection from the group by the player of at least one of the sets of Bingo numbers preselected by the player and stored in the memory of the computer as the group for play in a selected game of Bingo in a specific session of Bingo wherein a number of sets of Bingo numbers selected for play in the selected game of Bingo is less than a total number of sets of Bingo numbers in the group; (vi) addition by the computer of a control number for each set of Bingo numbers selected for play in the selected game of Bingo; (vii) output of a receipt with the control number, the set of Bingo numbers which is preselected and selected by the player, a price for the set of Bingo numbers which is preselected, a date of the game of Bingo and optionally a computer identification number; and (viii) output for verification of a winning set of Bingo numbers by means of the control number which is input into the computer by a manager of the game of Bingo.

Planet Bingo v. VKGS (invalid; 8-2014)

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•  Invention: Guaranteeing a party’s performance in an online transaction •  Abstract idea: “a transaction performance guaranty” •  Comment: •  “At best, that narrowing is an ‘attempt[] to limit the use’ of the abstract guarantee idea ‘to a

particular technological environment’ which has long been held insufficient to save a claim in this context.”

•  “If enough extra is included in a claim, it passes muster under section 101 even if it amounts to a ‘business method.’”

•  Claim: •  A method, comprising: •  receiving, by at least one computer application program running on a computer of a safe

transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;

•  processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party,

•  wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

buySAFE v. Google (invalid; 9-2014)

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•  Invention: Receiving copyrighted media, selecting an ad, offering the media in exchange for watching the ad, displaying the add, allowing a person to access the media, and receiving payment for a sponsor of the ad.

•  Abstract idea: “offering free media in exchange for advertisements” •  Comments •  “The claims of the ‘545 patent, however, as not tied to any particularly novel machine or

apparatus, only a general purpose computer. As we have previously held, the Internet is not sufficient to save the patent under the machine prong of the machine-or-transformation test. It is a ubiquitous machine, not a novel machine. Any transformation from teh use of computers or the transfer of content between computers is merely what computers do and does not change the analysis.”

•  Note: The CAFC did not establish or allege that “offering free media in exchange for advertisements” was a very old or well known concept.

Ultramercial v. Hulu (invalid; 11-2014)

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•  Claim: •  1. A method for distribution of products over the Internet via a facilitator, said method comprising

the steps of: a first step of receiving, from a content provider, media products that are covered by intellectual-property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data; a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plurality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously presented is less than the number of transaction cycles contracted by the sponsor of the sponsor message; a third step of providing the media product for sale at an Internet website; a fourth step of restricting general public access to said media product; a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the consumer views the sponsor message; a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product; a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the consumer; an eighth step of, if the sponsor message is not an interactive message, allowing said consumer access to said media product after said step of facilitating the display of said sponsor message; a ninth step of, if the sponsor message is an interactive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query; a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

Ultramercial v. Hulu (invalid; 11-2014)

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•  Invention: Generating a composite Web page that has the look and feel of a host website with elements of a merchant website

•  Abstract idea: None identified - “Distinguishing between claims that recite a patentable-eligible concept and calims that add too little to a patent-eligible concept can be difficult, as the line separating the two is not always clear.”

•  Comments:

DDR Holdings vs. Hotels.com (valid; 12-2014)

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•  Claim: •  1. A method of an outsource provider serving web pages offering commercial opportunities,

the method comprising: •  (a) automatically at a server of the outsource provider, in response to activation, by a web

browser of a computer user, of a link displayed by one of a plurality of first web pages, recognizing as the source page the one of the first web pages on which the link has been activated; (i) wherein each of the first web pages belongs to one of a plurality of web page owners; (ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and (iii) wherein the selected merchant, the outsource provider, and the owner of the first web page are each third parties with respect to one other;

•  (b) automatically retrieving from a storage coupled to the server pre-stored data associated with the source page; and then

•  (c) automatically with the server computer-generating and transmitting to the web browser a second web page that includes: (i) information associated with the commerce object associated with the link that has been activated, and (ii) a plurality of visually perceptible elements derived from the retrieved pre-stored data and visually corresponding to the source page.

DDR Holdings vs. Hotels.com (valid; 12-2014)

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•  Invention: The invention relates to extracting data from hard copies of documents, recognizing the extracted data, and storing this data in memory.

•  Abstract idea: “recognizing and storing information from hardcopy documents using a scanner and a computer”

•  Comments: •  CET’s patents contained 242 claims total. •  The CAFC dismissed the narrower dependent claims that recited more technical details. •  “while these claims may have a narrower scope than the representative claims, no claims

contains an ‘inventive concept’.” •  “We know, however, that although there is no categorical business-method exception,

claims directed to the mere formulation and manipulation of economic relations may involve an abstract idea.”

Content Extraction and Trasmission LLC v. Wells Fargo (invalid; 12-2014)

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•  Claim: •  A method of processing information from a diversity of types of hard copy documents, said

method comprising the steps of: (a) receiving output representing a diversity of types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, said receiving step not preceded by scanning, via said automated digitizing unit, of a separate document containing format requirements; (b) recognizing portions of said hard copy documents corresponding to a first data field; and (c) storing information from said portions of said hard copy documents corresponding to said first data field into memory locations for said first data field.

Content Extraction and Trasmission LLC v. Wells Fargo (invalid; 12-2014)

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Questions?

Patrick Jewik [email protected]

Claims Strategies

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Post Alice Aftermath – The Death of Hundreds of Thousands of Patentswebcasts.acc.com/handouts/9.9.15_IPC_Slides_ACC_.pdf · · 2015-09-08Post Alice Aftermath – The Death of

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