U.S.
Supreme Court Affirms: Alice Corp. Claims are Ineligible as Abstract
In Alice Corp. Pty.
Ltd. V. CLS Bank Int’l (Case No. 13-298), the Supreme Court affirmed the
en banc Federal Circuit holding that Alice Corp.’s patent claims are
ineligible pursuant to 35 U.S.C. § 101 because they are directed to an
abstract idea. The Federal Circuit had
affirmed the district court finding of ineligibility in a per curium opinion, without agreeing
on the test or the reasoning.
The patents at issue cover methods and apparatus as well
as data processing systems for managing risk in financial exchanges; the risk
that only one party will meet its obligation. Claims include the method for exchange, a computer system configured
to carry out the method, and a medium containing the program code for the
method.
The Court explained that laws of nature, natural
phenomena, and abstract ideas are implicit exceptions to section 101 and are
not patentable. Their exclusion is
based on the principle of pre-emption. Monopolization of the “basic tools of scientific and technological
work,” would pre-empt their use in all fields, impeding innovation rather
than promoting it. The courts must
“distinguish between patents that claim the building blocks of human
ingenuity and those that integrate the building blocks into something more,
thereby transforming them into a patent-eligible invention.”
The Court set forth the steps from Mayo, first determining “whether the claims at issue are directed
to one of those patent-ineligible concepts,” and second, if they are, asking
“what else is there in the claims before us?” In this second step the Court considers the individual elements of the
claim, and the whole claim “as an ordered combination” to determine whether
it is transformed into a “patent eligible application” of the ineligible
concept.
The Court found that like the algorithm in Benson, or the method for hedging
financial risk in Bilski, Alice
Corp.’s claims “are directed to an abstract idea.” The Court therefore turned to the second
step and concluded that “the method claims, which merely require generic
computer implementation, fail to transform that abstract idea into a
patent-eligible invention.”
The Court “examined[d] the elements of the claim to
determine whether it contains an ‘inventive concept’ sufficient to ‘transform’
the claimed abstract idea into a patent-eligible application.” This “requires ‘more than simply stating
the [abstract idea] while adding the words ‘apply it,’” as a safeguard
against “‘drafting effort[s] designed to monopolize the [abstract idea].’” According to Mayo, adding general, conventional steps does not provide
“inventive concept,” and Benson held that implementation by existing computers “is not a patentable
application.” “Flook stands for proposition that the prohibition against patenting
abstract ideas cannot be circumvented by attempting to limit the use of [the
idea] to a particular technological environment.” “[C]laims in Diehr were patent eligible because they improved an existing
technological process, not because they were implemented on a computer.” Applying these cases, the Court held that
“the mere recitation of a generic computer cannot transform a
patent-ineligible abstract idea into a patent-eligible invention.” As adding the words “apply it” is not
enough, nor is limiting it to the use of a generic computer; “[s]tating an
abstract idea while adding the words ‘apply it with a computer’ simply
combines those two steps, with the same deficient result.”
The Court noted that this is
in agreement with the pre-emption concerns of § 101. The use of computers in most fields
precludes “generic computer implementation” from providing “practical
assurance that the process is more than a drafting effort designed to
monopolize the [abstract idea] itself.” The Court held that the claims do not “do more than simply instruct
the practitioner to implement the abstract idea of intermediated settlement
on a generic computer.” The Court
considered the individual elements of the claims, finding them to “do no more
than require a generic computer to perform generic computer functions.” Then the Court considered the claims “as an
ordered combination,” finding that they merely instruct the application of
the abstract idea using a generic computer. The “claims to a computer system and a computer readable medium
fail[ed] for substantially the same reasons,” and the Court affirmed the
holding of ineligibility.
Federal Circuit Affirms Invalidity Due
to Obviousness
In Bristol-Myers
Squib Co. v. Teva Pharmaceuticals USA, Inc. (Appeal No. 2013-1306),
Bristol-Myers Squib (BMS) sued Teva Pharmaceuticals (Teva) for patent
infringement and the district court found the asserted claims of the patent
to be invalid as obvious.
BMS contended that a person having ordinary skill in the
art would have had to make too many decisions to arrive at the patented
product, selecting: a class of nucleoside analog (the manmade version of DNA
building blocks), a lead compound from the class, the portion of the molecule
to alter, the position and type of chemical element, and the bond. The Federal Circuit concluded that the
district court’s analysis was well supported, noting that the nucleoside
analog was known as a “promising area” for the art, that the lead compound
was being treated as such in the field, there was motivation to select the
portion of the molecule, position and chemical element, and that the selected
bond was the more conservative choice. The Court held that the list of choices equated to “a small, finite
number of changes to try,” and “skilled artisans would have had a reason to
select the route that produced the claimed invention.”
BMS also argued secondary
considerations of nonobviousness including, commercial success, long-felt
need, and unexpected results. The
district court found some evidence of secondary considerations; but the
success was “less dynamic” than needed, long felt need was interrupted by two
other drugs treating the same disease which were invented before the patented
invention, and the unexpected results were “differences in degree” which “are
not as persuasive in rebutting obviousness as differences in kind.” The district court found and the Federal
Circuit affirmed that the evidence “provided some support to BMS’s argument
to nonobviousness, but did not find it sufficient.” The Federal Circuit therefore affirmed the
judgment that the patent claim at suit is invalid as obvious. BMS has requested en banc review.
Federal Circuit Grants Writ of
Mandamus to Sever and Transfer Action from Eastern District of Texas to
Western District of Washington
In In re Nintendo of
America, Inc. (Appeal No. 2014-132), Secure Axcess filed suit
against Nintendo and eleven retailer defendants in the Eastern District of
Texas for patent infringement. The
district court denied a motion by Nintendo and the retailers to sever and
stay the claims against the retailers, and transfer the action against
Nintendo to the Western District of Washington. The Defendants filed a petition for writ of
mandamus.
The district court denied the motion to sever and stay,
noting the Plaintiff’s argument that it could “obtain a higher royalty
against the retailers in light of higher retail prices and the practice of
bundling.” Having decided against
severance, the district court denied the request for transfer as it was “unclear
whether the entire action could have been brought in the transferee venue.”
The Federal Circuit noted that Nintendo’s key executives,
sales and marketing decision makers, and related documents were located in
Washington. The Federal Circuit further
noted that Secure Axcess is “a company that acquires, licenses, and enforces
patents,” and that although its executives work in various parts of the
country, all business cards list a 200 square foot office in the Eastern
District of Texas as the principal place of business. No witnesses were found to reside in the
Eastern District of Texas.
The Federal Circuit held that the royalty rate argument
against severance is “outweighed” as the prosecution of the retailers would
be advanced or mooted by the result of the case against Nintendo. Secure Axcess “has no claim against the
Retailers unless the infringement claims against Nintedo are resolved in
favor of Secure Axcess.”
The Federal Circuit stated that the “benefits of trying
the case against Nintendo in the Western District of Washington are
indisputable,” and therefore ordered that the “district court order denying
the motion to sever, transfer, and stay is vacated, and the district court is
directed to grant petitioners’ motion.”
Federal Circuit Reverses Summary
Judgment of Non-Infringement Based on Claim Construction
In Hill-Rom
Services, Inc., v. Stryker Corp. (Appeal No. 2013-1450), Hill-Rom filed
suit against Stryker for infringement. The parties stipulated to noninfringement based upon the court’s claim
construction, and Hill-Rom appealed. The
district court construed the term “datalink” to include a cable, and not a
wireless connection. Hill-Rom argued
that the plain and ordinary meaning is “a link that carries data”
incorporating both wired and wireless connections. Stryker argued that the specification
limited it to a wired connection.
The Federal Circuit agreed with Hill-Rom, noting that the
only two exceptions to the plain and ordinary meaning in claim construction
are: (1) when the patentee acts as a lexicographer and defines the term, or
(2) when the patentee disavows the full scope of the term. The Federal Circuit also explained that
claims are read in view of the specification, but are not given limitations
from embodiments in the specification. Although a wireless connection is not disclosed in the specification,
the Federal Circuit noted that “a specification need not disclose what is
well-known in the art,” and that including wireless connections is “not
inconsistent with the examiner’s statement that the ‘038 patent does not
teach a wireless receiver.” The Court
also found that this construction is supported by claim differentiation.
The district court applied judicial estoppel in construing
another term, but the Federal Circuit held that statements made during the
prosecution of a later, unrelated patent cannot create judicial estoppel and
that the later position was not “clearly inconsistent with the earlier
position.” The Federal Circuit
therefore reversed the grant of summary judgment of noninfringement and
remanded for further proceedings. |
