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| Joshua L. Sohn |
This article contends that such criticism is unwarranted. Rather than making unprincipled or chaotic decisions, courts have treated Section 101 as a “technological arts” test for patent eligibility. This is particularly true for computer-implemented patents. When computer-implemented patents have not advanced the technological arts — software technology, hardware technology, etc. — they have been struck down under Section 101. Conversely, when computer-implemented patents have been found to advance the technological arts, they have been upheld under Section 101. As Federal Circuit Judge H. Robert Mayer has stated regarding the canonical U.S. Supreme Court Alice case for eligibility of computer-implemented patents: “Alice [], for all intents and purposes, set out a technological arts test for patent eligibility.”[4] This is indeed the test that has been applied.
The Alice Framework for Applying Section 101 to Computer-Implemented Claims
Section 101 states: “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. ”[5] However, the Supreme Court “ha[s] long held that this provision contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.”[6]
The most recent Supreme Court case for Section 101 eligibility was the 2014 Alice case. The claims in Alice “relate to a computerized scheme for mitigating ‘settlement risk’ — i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation.”[7] The Supreme Court applied a two-step framework to determine whether this patent claimed a patent-ineligible law of nature, natural phenomenon, or abstract idea. Under this two-step framework, “[f]irst [] we determine whether the claims at issue are directed to one of those patent-ineligible concepts. If so, we then ask, ‘[w]hat else is there in the claims before us?’ ... We have described step two of this analysis as a search for an ‘inventive concept’ — i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’”[8]
Applying this two-step framework, the Supreme Court held that the Alice claims were ineligible. At step one, the Supreme Court held that the claims “are drawn to the concept of intermediated settlement, i.e., the use of a third party to mitigate settlement risk.”[9] It noted that “intermediated settlement is ‘a fundamental economic practice’ ... Thus, intermediated settlement [] is an ‘abstract idea’ beyond the scope of § 101.”[10]
At step two, the Supreme Court held that the claims “fail to transform that abstract idea into a patent-eligible invention.”[11] The claims “do not, for example, purport to improve the functioning of the computer itself. Nor do they effect an improvement in any other technology or technical field.”[12] “Instead, the claims at issue amount to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer,” which “is not ‘enough’ to transform an abstract idea into a patent-eligible invention.”[13]
The Post-Alice Case Law Has Treated Section 101 as a De Facto “Technological Arts” Test
When judging the eligibility of computer-implemented claims in the post-Alice period, courts (including the Federal Circuit) have universally invoked the two-step framework described in Alice. In practice, however, the Federal Circuit has consistently applied a de facto “technological arts” test. That is to say, the Federal Circuit has consistently invalidated patent claims that simply apply economic, business, or human-interaction practices on a computer without improving the computer itself or any other technological art. Conversely, the Federal Circuit has consistently upheld patent claims that it views as improving the technological arts, such as claims that recite inventive software routines to improve software technology.
For an example of the former (ineligible) claim, consider the Ultramercial case that spawned Judge Mayer’s quote referenced above. At Alice step one, the Federal Circuit found that “the abstract idea at the heart of the ‘545 patent was ‘that one can use [an] advertisement as an exchange or currency.’”[14] At Alice step two, the Federal Circuit held that “the limitations of the ′545 claims do not transform the abstract idea that they recite into patent-eligible subject matter because the claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity ... . Adding routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet does not transform an otherwise abstract idea into patent-eligible subject matter.”[15] In other words, the Ultramercial claims were directed to the economic practice of using an advertisement as currency, and the computerized steps — updating an activity log, employing the internet, etc. — claimed no advancement in the field of computers. There was thus no technological advancement in the asserted claims. Absent a technological advancement, the claims were not patent-eligible under Section 101.
A similar logic applies to the other post-Alice Federal Circuit decisions invalidating computer-implemented claims under Section 101. Many of these claims recited purported advancements in economics, business, or human interactions — but none of them recited any advancement in the technological arts. In BuySAFE Inc. v. Google Inc.,[16] for example, the invalidated claims were directed to “contractual relations” and contained only “generic” computer functionality that “is not even arguably inventive.”[17] In OIP Techs. Inc. v. Amazon.com Inc.,[18] the claims were directed to “offer-based price optimization” together with “‘conventional computer activities or routine data-gathering steps.”[19] In Planet Bingo LLC v. VKGS LLC,[20] the claims were directed to “managing a bingo game” and recited no technological improvement.[21] And in Content Extraction and Transmission LLC v. Wells Fargo Bank, Nat’l Assoc.,[22] the claims were directed to the “well-known” concept of “data collection, recognition, and storage,”[23] again with no technological improvement.
By contrast, the Federal Circuit has consistently upheld claims that it interprets as reciting technological improvements. For example, in Enfish LLC v. Microsoft Corp.,[24] the Federal Circuit found that claims directed to “a self-referential table for a computer database” were not directed to an abstract idea at Alice step one.[25] It noted that “the self-referential table functions differently than conventional database structures,” and offered “increased flexibility, faster search times, and smaller memory requirements.”[26] Because the claims thus recited “a specific improvement to computer functionality,”[27] they were patent-eligible. Indeed, the Federal Circuit made this point explicitly in the peroration to its opinion:
In sum, the self-referential table recited in the claims on appeal is a specific type of data structure designed to improve the way a computer stores and retrieves data in memory ... we are not faced with a situation where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation. Rather, the claims are directed to a specific implementation of a solution to a problem in the software arts. Accordingly, we find the claims at issue are not directed to an abstract idea.[28]
The recent case of McRO Inc. v. Bandai Namco Games Am Inc.[29] provides a similar analysis and result. The claims in McRO addressed a specific set of “rules” — essentially software instructions — for improving simulated speech in computer animation graphics.[30] In upholding this claim, the Federal Circuit specifically stated that “claim 1 is directed to a patentable, technological improvement over the existing, manual 3-D animation techniques. The claim uses the limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice.”[31]
Enfish and McRO are not particularly anomalous. Rather, the Federal Circuit has upheld other claims that it viewed as reciting technological improvements to the software arts. For example, the claims in DDR Holdings LLC v. Hotels.com LP[32] involved “creating a new web page” that blended aspects of a host website and a third-party merchant’s website.[33] The Federal Circuit held that these claims were patent-eligible under Section 101 because “the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”[34] The court viewed the invention as solving a problem “in a particular, technical way.”[35]
As another example, in Bascom Glob. Internet Servs. Inc. v. AT&T Mobility LLC,[36] the Federal Circuit held that claims were patent-eligible because they recited “a technology-based solution ... to filter content on the Internet that overcomes existing problems with other Internet filtering systems.”[37] Because “the claimed invention represents a ‘software-based invention[ ] that improve[s] the performance of the computer system itself,’” it was deemed patent-eligible.[38]
In sum, the post-Alice Section 101 case law for computer-implemented claims is not “chaos,” contrary to Director Kappos’ statements. Rather, it is quite principled. Computer-implemented claims will be deemed patent-eligible if they improve the technological arts, including the software arts. And they will not be deemed patent-eligible if they do not improve the technological arts. The “technological arts” test described by Judge Mayer is indeed the test that the Federal Circuit has been applying post-Alice to determine the eligibility of computer-implemented claims.
This is not to say that the technological arts test will yield entirely predictable results in every single case. There certainly can be hard cases for which reasonable minds could differ about whether the challenged claims truly claim a technological improvement. Indeed, DDR featured a vigorous dissent by Judge Mayer himself, opining that the challenged claims did not recite a technological improvement.[39] But that is the nature of legal tests: There will always be some edge-cases for which judges might differ on whether the test is satisfied. So it is for the technological arts test. While application of this test might yield contestable results in certain cases, the test itself has been consistently applied in the post-Alice Federal Circuit case law.
The “Technological Arts” Test Is Appropriate
Not only does the “technological arts” test accurately describe how the Federal Circuit has treated computer-implemented claims post-Alice, but this test is normatively correct. Courts should assess patent-eligibility based on whether the claims improve the technological arts.
One reason is historical. The Constitution’s Patent Clause was based on English patent law,[40] and English law almost universally limited patent protection to technological improvements.[41] Moreover, the first U.S. Patent Act in 1793 authorized patents for improvements to the “useful arts,” which “was widely understood to encompass the fields that we would now describe as relating to technology or ‘technological arts.’”[42] This is highly relevant to interpreting the current version of Section 101, given that the current version of Section 101 was meant to track the scope of the 1793 Act.[43] Thus, there are strong historical grounds to conclude that Section 101 should limit patent eligibility to improvements in the technological arts.
There are also strong policy reasons to limit patent eligibility to improvements in the technological arts, because a contrary rule could paradoxically stifle technological developments. To illustrate this point, consider that many computerized services combine technological and nontechnological elements. Facebook’s famous news feed, for example, combines technological photo-recognition software with nontechnological elements such as sponsored posts. Online shopping services may also combine technological search software with nontechnological marketing elements. If third parties were allowed to patent the nontechnological aspects of these services, it would effectively block development of the technological aspects as well, by blocking the services as a whole.
Indeed, in a world where an increasing amount of commerce and human interaction takes place in the computerized realm, technological computer elements and nontechnological commercial or human-interaction elements are increasingly found in the same products and services. If patents were allowed on commercial or human-interaction inventions, then patentees could use these nontechnological patents to hold up development in technological fields, by blocking these products and services in toto. Patentees could achieve this result even if they themselves made no contribution to any technological field. This would upset the balance struck by the U.S. patent system, in which inventors are granted limited monopolies in exchange for furthering the relevant art.[44]
Limiting Section 101 to improvements in the technological arts also conserves judicial and party resources by allowing Section 101 eligibility to be determined at an early stage of the litigation, such as the 12(b)(6) motion-to-dismiss stage. This is because most (if not all) patents state on their face what improvement they purport to provide over the prior art, and patents-in-suit are attached to plaintiffs’ complaints. Thus, even at the 12(b)(6) stage — where courts cannot consider material outside the complaint — a court can look at the patent-in-suit, ascertain whether the patent purports to improve a technological or nontechnological field, and decide Section 101 eligibility accordingly. If the field is not technological, then the patent suit can be swiftly dismissed at the 12(b)(6) stage. If the field is technological, then the suit may be allowed to proceed, unless the patent’s alleged improvement to that field is not “plausible on its face.”[45] Judges should usually be able to determine — based on their own knowledge — whether a given field is technological, even at the 12(b)(6) stage without the benefit of expert testimony or extrinsic evidence. To paraphrase the cliche, one need not be a rocket scientist to conclude that the field of rocket science is a technological field. And one need not be an advertising executive to conclude that the field of advertising is not.
Conclusion
In sum, the commentary suggesting that Section 101 has created unpredictable chaos is not well founded. Rather, Section 101 has been consistently applied to weed out computer-implemented patents that do not improve the technological arts. This is fully consistent with the statutory design and serves the laudable goal of conserving resources in patent litigation.
—By Joshua L. Sohn, Quinn Emanuel Urquhart & Sullivan LLP
Joshua Sohn is of counsel in Quinn Emanuel's Washington, D.C., office.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] See Jason Rantanen, “Section 101 – Pivotal Moment for Clarity on Patent Subject Matter Eligibility” (April 21, 2016) (“recent calls for the abolition of Section 101 entirely and dissatisfaction with application of the Mayo/Alice test is reaching a critical level.”); available at http://patentlyo.com/patent/2016/04/section-subject-eligibility.html.
[2] “Kappos Calls for Abolition of Section 101 of Patent Act” (April 12, 2016), available at http://www.law360.com/articles/783604/kappos-calls-for-abolition-of-section-101-of-patent-act.
[3] Id.
[4] Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 717 (Fed. Cir. 2014) (Mayer, J., concurring) (citation omitted).
[5] 35 U.S.C. § 101.
[6] Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347, 2354 (2014).
[7] Id. at 2352.
[8] Id. at 2355 (internal citation omitted).
[9] Id. at 2356.
[10] Id.
[11] Id. at 2357.
[12] Id. (internal citation omitted).
[13] Id. at 2360 (internal citation omitted, emphasis in original).
[14] Ultramercial, 772 F.3d at 714.
[15] Id. at 715-16.
[16] 765 F.3d 1350 (Fed. Cir. 2014).
[17] Id. at 1355.
[18] 788 F.3d 1359 (Fed. Cir. 2015).
[19] Id. at 1363. As a later Federal Circuit case held, “the patent in OIP was not limited to a specific technical solution of the abstract idea.” BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1351-52 (Fed. Cir. 2016).
[20] 576 F. App’x 1005 (Fed. Cir. Aug. 26, 2014).
[21] Id. at 1007-09.
[22] 776 F.3d 1343 (Fed. Cir. 2014).
[23] Id. at 1347.
[24] 822 F.3d 1327 (Fed. Cir. 2016).
[25] Id. at 1337.
[26] Id.
[27] Id. at 1338.
[28] Id. at 1339 (emphasis added).
[29] -- F.3d --, 2016 WL 4896481 (Fed. Cir. Sept. 13, 2016).
[30] Id. at *3.
[31] Id. at *10 (emphasis added).
[32] 773 F.3d 1245 (Fed. Cir. 2014).
[33] Id. at 1248-49.
[34] Id.
[35] BASCOM, 827 F.3d at 1351 (addressing DDR).
[36] 827 F.3d 1341 (2016).
[37] Id. at 1351.
[38] Id. (Court’s brackets).
[39] DDR, 773 F.3d at 1263 (Mayer, J., dissenting) (“The claims asserted by DDR [] fall outside 35 U.S.C. § 101 because they simply describe an abstract concept—that an online merchant’s sales can be increased if two web pages have the same “look and feel”—and apply that concept using a generic computer.”); see also id. at 1264 (“DDR’s patents are long on obfuscation but short on substance. Indeed, much of what they disclose is so rudimentary that it borders on the comical.”)
[40] Bilski v. Kappos, 561 U.S. 593, 626 (2010) (Stevens, J., concurring).
[41] Id.
[42] Id. at 634.
[43] Id. at 639.
[44] U.S. Const., Art. I, Sec. 8, Cl. 8.
[45] Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Of course, as a case progresses and more evidence becomes available, a judge would be free to reassess whether a patent actually recites an improvement to a technological field.
