Recently, the Federal Circuit ruled on a software patent case that illustrates an application of last month’s U.S. Supreme Court decision in Alice v. CLS Bank on the patent eligibility of software in high-tech industries outside the financial services sector, including optics and photonics.
The decision in Alice was acutely anticipated in the high-tech community because of its potential effect on the ability to patent software. While the patents at issue were directed specifically to methods of using computers to carry out settlement risk mitigation in financial transactions and the computers so used, the broad question presented by the patentee Alice Corp. was whether computer-implemented inventions (e.g., software and computers running the software) in general are patentable subject matter under U.S. law.
While the Court did not directly address this broad question, the Court’s unanimous decision explained that to be eligible for patenting, such inventions had to be more than just an abstract idea or a generic computer applying the abstract idea. The Court laid out a two-step test for a court to evaluate whether an invention is eligible for patenting. This test was first enunciated by the Court in Mayo v. Prometheus, a 2012 case which found that a particular method of optimizing therapeutic efficacy of a drug was not eligible for patenting since it was merely an application of a law of nature using conventional steps. Under this test, a court must first determine whether the patent claims are directed to a patent-ineligible concept (e.g., an abstract idea, a natural phenomenon, or a law of nature). If so, the court must then determine whether the elements of the patent claims, considered both individually and as an ordered combination, transform the nature of the claim into something that is patent-eligible.
The Court applied this test to the patents at issue, and found that (i) the claims were directed to the abstract idea of “intermediated settlement,” which the Court said was “a fundamental economic practice long prevalent in our system of commerce” and (ii) the claims merely applied this abstract idea using a generic computer, and such conventional application did not transform the nature of the claims. As a result, the patents were ruled invalid for being directed to patent-ineligible subject matter.
The claims in Alice were directed to the financial services industry, but those of us involved with high-tech industries cannot take solace in this fact to think that our software inventions are not subject to this test as well. To illustrate, a recent Federal Circuit’s application of the two-part test of Alice and Mayo shows how we can expect it to be applied to all types of computer-implemented inventions.
In Digitech Image Tech. v. Electronics for Imaging, Inc. (EFI), the patent being asserted was originally issued to Polaroid Corp. in 2000 and after Polaroid’s bankruptcy in 2001 subsequently ended up in the hands of Digitech, a subsidiary of the non-practicing entity Acacia Research Corp. In this case, Digitech was asserting the patent against EFI as well as EFI’s customers and various on-line retailers. The claims of the patent were directed to “a device profile” which can be used to characterize and correct for distortions of an image’s color and spatial properties introduced by components of a digital image reproduction system, and a method of generating such a device profile. Digitech was appealing the decision by the district court that all the claims were invalid for being directed to patent-ineligible subject matter.
The Federal Circuit affirmed the district court’s ruling that the “device profile” was merely information in the form of “a collection of numerical data that lacks a physical component or physical manifestation.” For example, as shown on the right, Claim 1 recites that the device profile comprises “first data” regarding the color information of the image and “second data” regarding the spatial information of the image. Since the claims were directed to information in its non-tangible form, these claims were deemed invalid for not falling within the categories of patent-eligible subject matter under U.S. law (a “process, machine, manufacture, or composition of matter”).
With regard to the claims to the method of generating the device profile, the Federal Circuit applied the two-part test of Alice and Mayo and affirmed the district court here as well. First, the court found that the method claims were directed to an abstract idea because they described “a process of organizing information through mathematical correlations and [are] not tied to a specific structure or machine.” For example, as shown on the right, Claim 10 recites that the process comprises taking two data sets and combining them into a single data set, namely the device profile. Therefore, the claim recites “an ineligible abstract process of gathering and combining data that does not require input from a physical device.” The court then found that the method claims did not include anything further that would transform the nature of the claims into something that is patent-eligible. For example, the court held that there was nothing in the claims that expressly tied the method to an image processor. While the preamble of the claim mentions that the device profile can be used with a digital image reproduction system, the court found that this was merely an intended use of the device profile that did not limit the scope of the claim. Therefore, the method claims recite “a process that merely employs mathematical algorithms to manipulate existing information to generate additional information” which is an abstract idea that is not patent-eligible.
As illustrated by the Digitech case, applicants and patentees in high-tech industries outside the financial services industry should make sure that their method claims are able to traverse the two-part test for patent-eligible subject matter. Both the Alice ruling and the Digitech ruling confirm that merely reciting an abstract idea does not doom a claim to patent ineligibility. However, such method claims must be more than the conventional application of the abstract idea.
To be considered patent eligible, a claim to a computer-implemented process should recite more than merely “a process that employs mathematical algorithms to manipulate existing information to generate additional information.” Even if such information or data represent physical parameters or variables, or even if such a manipulation of data had never been done before, it is possible that the claim would be deemed patent-ineligible for being directed to “a process of organizing information through mathematical correlations [that] is not tied to a specific structure or machine,” as in Digitech.
For example, explicitly reciting the acquisition of input data from the physical world (e.g., measuring a parameter using a sensor) may be helpful to tie the process to a specific structure or machine and to transform the nature of the computer-implemented process into “something that is patent-eligible.” This is especially true if such measurements are not made conventionally. As another example, explicitly using the resultant data in making a determination or in controlling a mechanism may also provide the additional elements that transform the nature of the claim from the abstract realm into the patent-eligible physical realm. Such use can be an improvement to the physical system being utilized, including the functioning of the computer itself. However, such recited use should be more than merely applying the resultant data on a computer, particularly if the process can be performed by a generic computer.