Patent Eligible Subject Matter and High Tech Inventions

Patent Eligible Subject Matter and High
Tech Inventions Eric Nelson

October 19, 2012 Tokyo

The recipient may only view this work. No other right or license is granted. knobbe.com

Introduction to Patentable Subject Matter

• §101 sets the standard for patentable subject matter
• 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....”
• Contains an implicit exception: “laws of nature, natural
phenomena, and abstract ideas” are not patentable

© 2012 Knobbe, Martens, Olson & Bear, LLP all rights reserved. 2

§101 Issues for High Tech Inventions
How do you
know you
are here?
Systems and
And not
Methods
here?

Abstract Mathematical
Ideas Algorithms

Or here?


Trends in High Tech Cases and §101

Lourie Prost Wallach Linn O’Malley Radar

Bancorp
CLS Bank ?
Ultramercial
Dealertrack
Research Corp.

In re Ferguson
Cybersource
Fort Properties
Bilski ?


Trends in High Tech Cases and §101

Dyk Plager Newman Mayer Schall Moore Bryson
Bancorp
CLS Bank
Ultramercial
Dealertrack ?
Research Corp.
In re Ferguson ?
Cybersource
Fort Properties
Bilski ? ?


§101 – A Closer Look at Recent Cases

• CLS Bank Int’l v. Alice Corp. (Fed. Cir. July 9, 2012)
• Bancorp Servs. L.L.C. v. Sun Life Assurance Co. of
Canada (U.S.) (Fed. Cir. July 26, 2012)


CLS Bank Int’l v. Alice Corp. (Fed. Cir. July 9, 2012)
– System Claims
• A data processing system … comprising:
– a data storage unit having stored therein information about a shadow
credit record and shadow debit record for a party … and
– a computer, coupled to said data storage unit … configured to
• (a) receive a transaction;
• (b) electronically adjust said shadow credit record and/or said
shadow debit record … allowing only those transactions that do
not result in a value of said shadow debit record being less than
a value of said shadow credit record; and
• (c) generate an instruction … at the end of a period of time to
adjust said credit record and/or said debit record in accordance
with the adjustment of said shadow credit record and/or said
shadow debit record.


The Federal Circuit
• The Supreme Court “did not directly address how to determine
whether a claim is drawn to an abstract idea”
– Preemption – the extent to which preemption forecloses
innovation
– Machine and transformation


The Federal Circuit

• “It is fundamentally improper to paraphrase a claim in
overly simplistic generalities in assessing whether the
claim falls under the limited ‘abstract ideas’
exception”

• “Nothing in the Supreme Court’s precedent … allows a
court to go hunting for abstraction by ignoring the
concrete, palpable, tangible, and otherwise not
abstract invention the patentee actually claims”


The Federal Circuit
• Does the computer play a significant part in permitting the
claimed method to be performed?
– “It is difficult to conclude that the computer limitations … do
not play a significant part in the performance of the invention
or that the claims are not limited to a very specific application
of the concept.”

• “The limitations requiring specific ‘shadow’ records leave broad
room for other methods of using intermediaries to help
consummate exchanges … and, thus do not appear to preempt
much in the way of innovation”


The Federal Circuit

• “A claim that is drawn to a specific way of doing
something with a computer is likely to be patent
eligible whereas a claim to nothing more than the idea
of doing that thing on a computer may not”


Bancorp Servs. L.L.C. v. Sun Life Assurance Co. of
Canada (U.S.) (Fed. Cir. July 26, 2012)
9. A method for managing a life insurance policy on behalf OTHER CLAIMS
of a policy holder, the method comprising the steps of: • Additional Independent claims similar in scope
generating a life insurance policy including • Claim 17: steps “performed by a computer”
a stable value protected investment with an initial value
based on a value of underlying securities;
calculating fee units for members of a
management group which manage the life insurance
policy;
...
and
one of the steps of:
removing the fee units for members of the
management group which manage the life insurance
policy, and
accumulating fee units on behalf of the
management group.


Federal Circuit – Patent Eligibility

• Court looks to “underlying invention for patent-
eligibility purposes.” CyberSource Corp. v. Retail
Decisions, Inc.
• “Format of the various method, system, and media
claims [does] not change the patent eligibility
analysis under § 101.” CLS Bank Int’l v. Alice Corp.
• “To salvage a patent ineligible process, a computer
must be integral to the claimed invention, facilitating
the process in a way that a person making
calculations or computations could not.” SiRF Tech. v.
ITC.


Federal Circuit – Affirms
• Computers used to merely track, reconcile, and
administer a life insurance policy
– “Performing calculation more efficiently via a
computer does not materially alter the patent
eligibility of the claimed subject matter”
– “Using a computer to accelerate an ineligible
mental process does not make the process patent-
eligible”
• “[W]ithout the computer limitations nothing remains
in the claims but the abstract idea of managing a
stable value protected life insurance policy by
performing calculations and manipulating the
results”

Federal Circuit – Comparisons with CLS Bank

CLS BANK Bancorp
• District Court ignored “claim • District Court “evaluated
limitations in order to abstract a limitations in the claims as a
process down to a fundamental whole before concluding that
truth” they were invalid”

• “[I]t was difficult to conclude that • “[C]omputer limitations do not
the computer limitations…did not play a ‘significant part’ in the
play a significant part in the performance of the claimed
performance of the invention or invention” AND “claims are not
that the claims were not limited directed to a ‘very specific
to a very specific application of application’”
the inventive concept”


Practice Tips for High Tech Prosecution
• A method for identifying buyers of used cars, comprising:
– receiving one or more specifications from a buyer;
– comparing, via an electronic device, the one or more
specifications with a seller’s car inventory;
– identifying cars from the seller’s inventory that meet one or
more specifications from the buyer; and
– informing the seller and buyer of the identified cars.

Satisfies Machine
Prong, but
maybe not
sufficient


– comparing, via an electronic device, the one or more
specifications with a seller’s car inventory;
more specifications from the buyer [by using a particularized
process]; and

Increases the
complexity, but
may still not
sufficient

– converting the one or more specifications into coded
variables;
– comparing, via an electronic device, the coded variables with
a seller’s coded variable car inventory;
more specifications from the buyer [by using a particularized
process]; and

Satisfies the
Transformation
prong

Putting it All Together – Practice Tips for High
Tech Prosecution
• Use specification to focus on how invention improves “technology”
– e.g., uses less processing power, improves result
– but NOT simply performs a method more quickly or more efficiently
• Don’t simply copy/paste method steps into a CRM claim or add a
“component configured to” perform steps in a system claim
• Don’t rely simply on “System” or “CRM” claim style for patent eligibility
• Merely reciting “one or more computers” in the claim is likely
insufficient
– Draft claims so that if you take out the computer, the claim won’t work
• Integrate machine-related elements throughout the claim
• Provide language in the specification identifying a larger concept
of which the claims are a subgroup
• All independent claims should be prepared to withstand scrutiny


12790 El Camino Real
Eric Nelson San Diego, California 92130
Eric.Nelson@knobbe.com

Orange County San Diego San Francisco Silicon Valley Los Angeles Riverside Seattle Washington DC

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