The Often Overlooked Step In Drafting And Prosecuting Software-Related Patents

In Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012), and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), the Supreme Court of the United States established a two part test for determining patent subject matter eligibility. While most practitioners tend to focus on the second part of the test, for most software-related patents, focusing on the first part of the test may ultimately be a better strategy for patent drafting and during prosecution before the United States Patent and Trademark Office (“USPTO”).

Part I of the Mayo/Alice test requires an evaluation of whether the claims of a patent application are directed to a law of nature, a natural phenomena, or an abstract idea. Part I of the Mayo/Alice test is referred to as step 2A by the USPTO (See MPEP §2106). If the application is found to be directed to a law of nature, natural phenomena, or abstract idea, Part II of the Mayo/Alice test then requires a determination of whether any element, or combination of elements, in the claim is sufficient to ensure that the claim as a whole amounts to significantly more than the judicial exception. Part II of the Mayo/Alice test is referred to as step 2B by the USPTO (See MPEP §2106).

For software-related claims that have been deemed abstract by Examiners at the USPTO, the natural inclination of most practitioners is to either concede or fail to argue under Part I of the Mayo/Alice test, and then proceed to contend that nevertheless the claims as a whole amount to significantly more than a judicial exception under Part II of the Mayo/Alice test. From my experience prosecuting software-related applications in the USPTO, Examiners tend to be equal part offenders in this matter and often give short shrift to Part I of the Mayo/Alice test themselves. Many Examiners simply conclude that software-related claims are abstract and ask that the Applicant present an explanation for why the claims as a whole amount to significantly more than the judicial exception under Part II of the Mayo/Alice test.

Focusing on Part I of the Mayo/Alice test, however, may prove to be a more effective strategy when prosecuting software-related applications in the USPTO. As described in MPEP §2106.04(a)(I), a claim directed to an improvement in computer-related technology or to the functioning of the computer itself is not abstract. Therefore, if a software-related claim is rejected as abstract under Part I of the Mayo/Alice test, it is advisable, when possible, to counter the rejection by arguing that the claim is not abstract because it is directed to an improvement in computer-related technology or to the functioning of the computer itself. In fact, several significant decisions by the United States Court for Appeals for the Federal Circuit finding software-related claims patent eligible have focused on Part I of the Mayo/Alice test rather than Part II (See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1336-37 (Fed. Cir. 2016); McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1315 (Fed. Cir. 2016)).

The Patent Trial and Appeals Board has recently issued a decision that further illustrates the importance of Part I of the Mayo/Alice test. Specifically, the Board issued a decision regarding a software-related patent application, in which it reversed the Examiner’s interpretation that the independent claim was directed to an abstract idea. The underlying claim was to a method for “selecting, with a computer, a subset of measured data as an approximation in a computer implemented iterative geophysical data inversion,” “executing, with the computer, a first cycle of the iterative geophysical data inversion that uses the subset of measured data as the approximation,” and “varying, with the computer, the subset of measured data that is selected for processing in the iterative geophysical data inversion … wherein the varying reduces the artifact in a final subsurface model produced by the iterative geophysical data invention relative to the intermediate subsurface model” (See U.S. Patent Pub. No. 2014/0379315 A1). In reversing the Examiner’s interpretation, the Board relied exclusively on Part I of the Mayo/Alice test, without even addressing Part II of the test (See Ex parte Krebs et al., Appeal 2017-006095 (PTAB Feb. 15, 2018)).

When facing a subject matter eligibility rejection, it is important to argue that software-related claims are not directed to an abstract idea under Part I of the Mayo/Alice test, rather than simply conceding or failing to argue this point. Given that many software-related claims are directed to improvements in computer-related technology, or to the functioning of the computer itself, arguing under Part I of the Mayo/Alice test is an important tool for practitioners. In addition to keeping Part I of the Mayo/Alice test in mind when prosecuting an application before the USPTO, it is just as important to keep Part I of the Mayo/Alice test in mind when drafting software-related applications. Practitioners drafting software-related applications should always be sure to explain how the features recited in the claims provide an improvement to computer-related technology, or to the functioning of the computer itself.

Federal Circuit Weighs In On Product-by-Process Claim Construction

The scope of patent claims is generally based on the product itself and not the process, In re Thorpe, 777 F.2d 695, 697 (Fed. Cir. 1985) —except when it’s not, In re Garnero, 412 F.2d 276, 279 (CCPA 1969) (holding that a process claim connotes specific structure in a claimed composite and therefore should be given patentable weight and considered during examination).

In a recent case decided by the United States Court of Appeals for the Federal Circuit, In re Nordt Development Co., LLC, 2017-1445 (Feb. 8, 2018), the Court was faced with determining whether a patent claim reciting a framework for an elastic knee brace is patentable over the art where the claimed brace is formed though injection molding.  Specifically, amended claim 1 of the 13/241,865 Continue Reading

USITC Issues Two More Decisions On Requests For Early Disposition

Activity continues apace in the ITC’s pilot program for early disposition, with two more decisions issued in the past few weeks.  On January 19, the ITC issued a notice instituting an investigation in Certain Solid State Storage Drives, Stacked Electronics Components, and Products Containing Same, Inv. No. 337-TA-1097 that also designated the investigation for early disposition on the economic prong of the domestic industry requirement.  The presiding Administrative Law Judge (Judge Lord) subsequently scheduled a hearing for March 22, 2018 and has set a May 4, 2018 deadline for her decision (Order No. 3).  Among its requirements, the procedural schedule mandates a number of initial disclosures, including a chart of domestic industry contentions, for which it provides a suggested template.  On February 14, the ITC determined not to use the early disposition pilot program in Certain Microfluidic Systems, Inv. No. 337-TA-1100, stating that “the issues –inventorship, ownership, and standing – may be too complex to be decided within 100 days of institution.”

For more on the ITC’s pilot program, see our prior posts (here, here and here).

Does Aatrix Software Provide Software Patent Owners Shelter From The “Alice Storm”?

On February 14, 2018, a Federal Circuit panel in Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452, overturned a Middle District of Florida decision that held patent claims to systems and methods for importing data into viewable form on a computer to be patent-ineligible under 35 U.S.C. § 101.  According to the majority opinion authored by Judge Moore, the lower court erroneously granted dismissal of the case “in the face of factual allegations” concerning the non-routine and unconventional character of the claimed elements “that, if accepted as true,” would preclude dismissal.  In dissent, Judge Reyna criticized the majority for “attempt[ing] to shift the character of the § 101 inquiry from a legal question to a predominately factual inquiry.”

Indeed, the Aatrix majority opinion represents a significant departure from what the Federal Circuit has repeatedly recognized as the “possible and proper” practice of resolving patent eligibility challenges on the pleadings, a practice that legions of district court decisions have observed over the three years since the Supreme Court’s seminal decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014).  Under Alice and its progeny, claims directed to an abstract idea can still be patent-eligible if they contain unconventional or non-routine (“inventive”) elements that individually or in combination limit the application of the idea.  Numerous Federal Circuit panels have affirmed district court ineligibility decisions that were based on the court’s own reading of the elements a patent owner alleged were inventive in light of the patent’s intrinsic record (i.e., the claims, specification, and prosecution history). Continue Reading

Tempnology – The Latest Ruling On Protecting Trademark Licensees in Licensor Bankruptcy

In the US, trademark licensees are not expressly given expanded rights when their licensor files bankruptcy. This is in contrast to licensees of other intellectual property and is the result of the interpretation of Section 365(n) and Section 101(35A) of the Bankruptcy Code.

In Mission Prod. Holdings, Inc. v. Tempnology, LLC (In re Tempnology, LLC), No. 16-9016, the First Circuit Court of Appeals has revisited the question of whether the rights of trademark licensees should be equalized with those of licensees of other IP in licensor bankruptcy. In a recent blog post, Mark Salzberg, a partner in our Restructuring and Insolvency team in Washington, discusses Tempnology and its practical implications for trademark licensees. Click here to read the post.

California Court Weighs In On Patent Venue In Multi-District States

As reported in our prior blog post, the Federal Circuit appears poised to decide whether a corporation can be sued for patent infringement in any federal district in its state of incorporation.  In a recent order in the Central District of California case of Realtime Data LLC v. Nexenta Systems, Inc., No. 2-17-cv-07690-28 SJO (JCx), the court has addressed the issue pending before the Federal Circuit, and concludes the answer is “no.”

“… the Court finds that, in the context of 28 U.S.C. § 1400(b), a corporate defendant ‘resides’ only in the state of its incorporation and, within that state, only in the judicial district in which it maintains its principal place of business.”

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Brand Owners Can Restrict Online Sales To Preserve Luxury Image, says ECJ

Beauty products

The European Court of Justice (“ECJ”) has provided an interesting decision in the recent case of Coty Germany GmbH (“Coty”) v Parfümerie Akzente GmbH (“Parfümerie Akzente”). The case confirms that luxury manufacturers can restrict sales of their products via online marketplaces, in order to preserve the luxury image of the goods.

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Another Domestic Industry Lesson For Section 337 Litigants

The requirement of establishing a “domestic industry” in articles protected by a patent is a unique and important aspect of Section 337 litigation.  Without it, the statute’s exclusionary remedies against imports that infringe a patent cannot be invoked.  The statute enumerates the types of activities that can satisfy the “economic prong” of the domestic industry requirement: namely, significant investment in plant and equipment, significant employment of labor or capital, or substantial investment in engineering, research and development, or licensing.  However, that seemingly simple list has spawned numerous disputes and a significant body of precedent that can act as a counterweight to early disposition of the domestic industry issue, no matter how desirable that goal can be as a cost-saving measure. Continue Reading

USITC Rings In The New Year By Designating An Investigation For Early Disposition

Under a pilot program initiated in 2013, the U.S. International Trade Commission (ITC) may designate an investigation for early disposition if it believes that there is a potentially case-dispositive issue warranting the program’s speedy (100-day) treatment.  Since the program’s inception, the ITC has employed it sparingly, with only a handful of investigations garnering entry into the program.  Indeed, in the last three months of 2017, the ITC issued orders denying requests for entry into the early disposition program in four separate investigations (see our prior posts here and here).

On January 17, 2018, however, the ITC’s Notice of Institution designated Certain IOT Devices and Components Thereof (IOT, The Internet of Things)—Web Applications Displayed On A Browser, Inv. No. 337-TA-1094 for early disposition, just the sixth such designation the ITC has made since the program was implemented.  The designated issue is “whether the complainant has satisfied the domestic industry requirement.”  Chairman Schmidtlein filed a Memorandum indicating she did not support the use of the early disposition program in this investigation because it would impose unwarranted costs given that any decision “is likely to come after March 5, 2018,” which, the respondents contend, is the patent-in-suit’s expiration date.  The presiding Administrative Law Judge subsequently scheduled a hearing for March 14-15, 2018 and has set a May 2, 2018 deadline for his decision.

Victory In Case Applying Wood v Capita Principles

Squire Patton Boggs has secured victory for its client in the Court of Appeal in one of the first cases to apply the Supreme Court’s seminal ruling in Wood v Capita on the approach to contractual interpretation.

What happened in this case?

Squire Patton Boggs acted for Process Components Limited (PCL).

KPTL was a company operating in the field of powder processing and handling. Its business consisted of four areas known as ‘Unit Machines’, ‘Systems’, ‘Mucon’ and ‘Spares’. KPTL owned a number of intellectual property rights, including the brand name ‘KEK’, which was a registered trade mark (No. 2506657).

On 30 June 2009, KPTL went into administration. It entered into two asset sale agreements; one with PCL for the assets of the Mucon and Spares businesses (the ‘PCL Agreement’) and, ten days later, an agreement with KGL for the assets of the Unit Machine and Systems businesses (the ‘KGL Agreement’). PCL and KGL also entered into an agreement by which PCL licensed KGL to use intellectual property rights that had formerly belonged to KPTL (the ‘Licence’).

The asset sale agreements were unclear on which of KPTL’s intellectual property rights had been transferred to PCL and KGL respectively. The High Court held that, properly construed, the PCL Agreement transferred the intellectual property rights in the Mucon and Spares divisions to PCL. KGL had appealed against that, and other aspects of, the High Court’s ruling.

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