Challenges to patent eligibility under 35 U.S.C. § 101 have become so routine in patent litigation that it is easy to overlook the opinions that seem to issue almost daily from the district courts and, less frequently, from the Federal Circuit. If one were to judge solely by the tenor of recent cert petitions filed with the Supreme Court, however, one would likely conclude that the lower courts are still fundamentally confused as to how to properly apply the Supreme Court’s two-step analysis for ineligible “abstract ideas” set forth in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). For example, an amicus brief in support of a cert petition in Recognicorp, LLC v. Nintendo, No. 17-645 (denied, Jan. 8, 2018) argues that, at least in the context of data processing patents, “[t]he lower courts and the PTO have misunderstood the Mayo-Alice test and have created indeterminate and overly restrictive patent eligibility doctrine under Section 101.” Other recent petitions in which cert was denied have taken the lower courts to task for either improperly looking beyond the claims to assess patent eligibility or, to the other extreme, looking only at the claims. This is not to mention the argument that eligibility is not a cognizable defense at all in patent litigation, an issue also denied certiorari by the Supreme Court last year.
On the other hand, the impression one might get from reading some of the lower court opinions issued so far this year is the opposite: namely, there is a seemingly greater confidence in how to properly apply the Alice analysis. For example, in E-Tool Development, Inc. v. Maxim Integrated Products, Inc., No. 3-17-cv-00720-44 (D. Or., Jan. 11, 2018), a magistrate judge applied Alice to hold claims ineligible in a patent concerning the “automated selection of formulations and/or formulation components by specifying product characteristics.” According to the patent, the claimed inventions “serve customers within market segments that use selected components as raw materials for manufacture of specialty products. . .” The judge found it “clear that the Patent claims are drawn to the abstract idea of a business transaction in which a customer . . . assembles a custom product by choosing components with desired characteristics” and that the claims represent merely a patent-ineligible “algorithmization (sic) of the elements of the abstract transaction and the automatization (sic) of that algorithm.” Conversely, in Agri-Labs Holding LLC v. Taplogic, LLC, No. 15-cv-00026-152-TLS (N.D. Ind., Jan. 16, 2018), the Court had no problem rejecting an eligibility challenge to a method for soil sampling that included use of a smart phone, because the claimed method represented “an improved technique” providing “simplicity and precision” that, previously, “the industry had not been able to obtain.” The Court quoted the Federal Circuit’s decision in Electric Power Group LLC v. Alstom, S.A., 830 F.3d 1350 (Fed. Cir. 2016),—which noted “‘an important common-sense distinction between [patenting] ends sought and [the] particular means of achieving them, between desired results (functions) and particular ways of achieving (performing) them’”—, and found that the soil sampling patent at issue did “not claim the ends sought, but rather claims the means of achieving those ends.” Finally, in a recent decision affirming an examiner’s eligibility rejection of certain computer-based claims, the PTAB summarily dispensed with an argument that the examiner erred by failing to cite facts in support of the rejection, stating that “[w]e are aware of no controlling authority that requires the Office to provide factual evidence to support a finding that a claim is directed to an abstract idea.”
To be sure, the seemingly more confident application of Alice is not without its chinks. Although in 2017 the Federal Circuit issued 23 written opinions finding claims patent-ineligible and only 3 finding eligibility, notably, not all of the opinions were unanimous. Judge Linn issued a strong opinion dissenting in part from the ineligibility holding in Smart Sys. Innovations v. Chicago Transit Authority, No. 2016-1233 (Oct. 18, 2017), in which he stated that historic Supreme Court precedent suggests that patent ineligibility should be narrowly limited to “only those claims that preempt and thereby preclude or inhibit human ingenuity with regard to basic building blocks of scientific or technological activity.” Relatedly, the “means” and “ends” distinction utilized by the Indiana court in Agri-Labs, supra, as a “common-sense” eligibility gatekeeper was criticized in a late 2016 opinion in Amdocs (Isr.) Ltd. v. Openet Telecom Inc., 841 F.3d 1288 (Fed. Cir. 2016). There, the majority opinion finding the claims to be patent eligible criticized the means/ends distinction relied on by Judge Reyna in dissent as inapplicable to eligibility determinations because the longstanding Supreme Court precedent of Halliburton Oil Well Cementing Co. v. Walker, 329 U.S. 1 (1946) already “outlawed . . . broad ‘ends’ or function claiming” under a different statutory provision: the predecessor to Section 112’s definiteness requirement.
Although the Supreme Court seems to have indicated by its silence that the alleged lower court confusion in applying Alice is not worthy of its attention, it still seems possible that the Supreme Court will intercede in a case in which the convergence of Section 101 and Section 112 principles (a la Judge Reyna’s “creative” but “flawed” approach) presents a real opportunity for clarifying Section 101 jurisprudence and its relationship to Supreme Court precedent prohibiting purely functional claiming. Perhaps there is more than one way to arrive at “common sense.”