Dissecting Dissents for Ex Parte Appeals

By Eli Mazour and So Ra Ko, September10, 2018 – Dissent is not the highest form of judgment for judges on the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO).  As discussed in further detail below, our own analysis indicates that dissents for ex parte appeals are found in about .5% of decisions issued by the PTAB.  A PTAB judge deciding an ex parte appeal is more than ten times less likely to dissent than a Federal Circuit (CAFC) judge.

The PTAB decides thousands of ex parte appeals per year.  Each appeal is assigned to a panel of three Administrative Patent Judges (APJs).  While one judge is designated to write the initial opinion, all three judges are supposed to take an active role in adjudication before the final decision is issued.


Practice Insights in the Wake of Blackbird Tech LLC v. ELB Electronics, Inc.

By Matthew Allen

July 26, 2018- Practice Insights in the Wake of Blackbird Tech LLC v. ELB Electronics, Inc.

In Blackbird Tech LLC v. ELB Electronics, Inc. (Fed. Cir. July 16, 2018), the Federal Circuit found, with one judge dissenting, that the district court erred during claim construction by construing a claim limitation to include a requirement not included in the plain language of the claim, and not supported during the prosecution history.

The decision provides insight into how choices made during drafting and prosecution may affect claim construction, and provides insight into how issues of claim construction might be avoided.

The patent at issue (7,086,747) describes an energy efficient lighting apparatus designed to be retrofitted with an existing light fixture. At issue was claim construction regarding the meaning of “attachment surface,” and whether the attachment surface must be secured to a “ballast cover.” Specifically, claim 12 recites:

12. An energy-efficient lighting apparatus for retrofit with an existing light fixture having a ballast cover, comprising:
a housing having an attachment surface and an illumination surface;
a plurality of illumination surface holes in the illumination surface;
a circuit board comprising a plurality of light-emitting diodes, wherein the circuit board is positioned adjacent the housing so that the plurality of light-emitting diodes protrude through the plurality of illumination surface holes in the illumination surface; and
a fastening mechanism for securing the attachment surface of the lighting apparatus to the illumination surface, wherein the lighting apparatus is coupled to a wall switch and wherein the illumination of the light-emitting diodes is controllable based upon the position of the wall switch.

Blackbird argued that “attachment surface” should be construed as “layer of the housing to which the illumination surface is secured,” while ELB argued (and the district court agreed) that “attachment surface” should be construed as “layer of the housing that is secured to the ballast cover.”

In concluding that “claim 12 does not require the attachment surface to be secured to the ballast cover,” the Federal Circuit relied on the plain language of claim 12, stating that claim 12 “does not require the attachment surface be secured to anything other than the illumination surface.” The Court also pointed out that there was no suggestion (e.g., in the specification or during prosecution or litigation) indicating that the fastening mechanism securing the attachment surface to the ballast cover was an important feature of the claimed invention.

Interestingly, the Federal Circuit also noted that “possibly the most important reason why the fastener for connecting the attachment surface to the ballast cover disclosed in an embodiment ought not be imported into the claim is because that limitation was originally present in claim 12 and was expressly eliminated during prosecution.” During prosecution, an amendment made “to resolve 112 issues” deleted “ballast cover” and replaced it with “illumination surface.” The federal circuit concluded that “[n]o ordinary artisan could read the prosecution history as anything other than eliminating the requirement that a fastening mechanism secures the attachment surface to the ballast cover.”

In his dissent, Circuit Judge Reyna concluded “that the district court correctly construed ‘attachment surface’ to mean ‘layer of the housing that is secured to the ballast cover.’” In particular, Circuit Judge Reyna states:

The plain language of claim 12, read in the context of the specification, implicitly requires that the attachment surface be secured to the ballast cover to achieve the retrofit function. Apart from the preamble, which the parties agree is limiting, claim 12 contains no reference to the ballast cover, the existing light fixture, or where or how the apparatus is retrofit with the existing light fixture. Because the only feature of the existing light fixture described in claim 12 is the ballast cover, a person of ordinary skill would necessarily conclude that the attachment surface is secured to the ballast cover of the existing light fixture.

In addition to the plain language argument, Circuit Judge Reyna noted that “[e]very single embodiment of the retrofit lighting apparatus in the specification describes securing the attachment surface to the ballast cover of the existing light fixture.” He also cites a portion of the specification, which states that “[i]n typical operation, the attachment surface 530 is secured to the ballast cover,” to support his conclusion that the attachment surface should be read as being secured to the ballast cover.

Clearly, this case was not as clear cut as the plain language of claim 12 might have made it seem. However, the case does provide insight into how practitioners might draft and prosecute an application in a manner designed to avoid unfavorable claim construction.

For example, both the district court, and the dissenting Circuit Judge, felt that the specification did not make it clear that the attachment surface might not be secured to the ballast cover. In describing various components, a patent drafter might avoid similar issues by describing components as having multiple functions or capabilities, or avoiding describing a component as serving only one function.

In addition, the inclusion of “ballast cover” in the preamble of claim 12 was given weight in both the majority and dissenting opinions. During drafting, or prosecution, a practitioner might wish to avoid including (or amend to exclude), in the preamble of a claim, limitations, structure, or the like, which might be construed as being somehow tied into other claimed features.

Also, during prosecution, the elimination of claim features is clearly given weight in determining whether an eliminated feature might be required for patentability. Accordingly, rather than leaving in unnecessary claim features, it may be beneficial to remove claim features in a manner designed to pre-empt a claim construction that requires a claim feature that is actually not necessary for patentability.

Download Blackbird Tech LLC v. ELB Electronics, Inc..

Case Summary of Medtronic, Inc. v. Barry

By James Olsen
June 17, 2018- Case Summary of Medtronic, Inc. v. Barry, C.A. No. 2017-1169 (Fed. Cir. June 11, 2018)

This is an appeal from two related decisions of the U.S. Patent and Trademark Office’s Patent Trial and Appeals Board (Board) in inter partes review (IPR) proceedings.  The Board concluded that the petitioner, Medtronic, Inc., had not proven that the challenged patent claims are unpatentable.  The Federal Circuit affirmed-in-part and vacated-in-part the decision.

Dr. Mark Barry sued Medtronic for patent infringement in the Eastern District of Texas.  Barry alleged that Medtronic’s products infringed U.S. Patent Nos. 7,670,358 (the 358 Patent) and 7,776,072 (the 072 Patent).  Medtronic petitioned for, and the Board instituted, IPR proceedings for all claims in both patents.

During the IPR proceedings, Medtronic asserted that the claims of the patents were obvious over three references: (1) U.S. Patent Application No. 2005/0245928 (the 928 Application), (2) a book chapter which appears in Masters Techniques in Orthopaedic Surgery: The Spine (2d ed.) (MTOS); and (3) a video entitled “Thoracic Pedicle Screws for Idiopathic Scoliosis” and slides entitled “Free Hand Thoracic Screw Placement and Clinical Use in Scoliosis and Kyphosis Surgery” (Video and Slides).  The Board determined that the claims of the patents were not obvious over the 928 Application and MTOS, and that the Video and Slides were not prior art since they were not publicly accessible.

The primary dispute is whether the Video and Slides were publicly accessible, and thus, prior art to the 358 patent and the 072 patent.

Patents at Issue
The 358 patent relates to a method for ameliorating aberrant spinal column deviation conditions, such as scoliosis.  The 072 patent is a continuation-in-part of the application that led to the 358 patent and shares substantially the same specification.

The Federal Circuit affirmed the Board’s determination that the claims of the patents were not obvious over the 928 Application and MTOS.  However, Federal Circuit held that the Board erred in concluding that the Video and Slides were not accessible to the public.

On appeal, the parties disputed whether the Video and Slides constituted printed publications within the meaning of 35 U.S.C. § 102(b).  A CD containing the Video was distributed at three separate programs in 2003: (1) a meeting of the “Spinal Deformity Study Group” (SDSG) in Scottsdale, Arizona, (the Scottsdale program); (2) the Advanced Concepts in Spinal Deformity Surgery meeting in Colorado Springs, Colorado (the Colorado Springs program); and (3) the Spinal Deformity Study Symposium meeting in St. Louis, Missouri.  Binders containing relevant portions of the Slides were also distributed at the Colorado Springs and St. Louis programs.  The earliest of the three 2003 programs, the Scottsdale program, was limited to 20 SDSG members (e.g., experts within the field of spinal deformity), and the other two programs were attended by 20 and 55 surgeons at the Colorado Springs and St. Louis programs, respectively.

The Federal Circuit found that the determination of whether a document is a “printed publication” under 35 U.S.C. § 102(b) involves a case-by-case inquiry into the facts and circumstances surrounding the reference’s disclosure to members of the public (citing In re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004)).  A reference will be considered publicly accessible if it was disseminated or otherwise made available to the extent that persons interested and ordinarily skilled in the subject matter or art exercising reasonable diligence can locate it.

The Federal Circuit held that the question becomes whether such materials were sufficiently disseminated at the time of their distribution at the conferences.  The Federal Circuit pointed to Massachusetts Institute of Technology v. AB Fortia (MIT), where a paper that was orally presented at a conference to a group of cell culturists interested in the subject matter was considered a “printed publication.” 774 F.2d 1104, 1109 (Fed. Cir. 1985).  In that case, between 50 and 500 persons having ordinary skill in the art were told of the existence of the paper and informed of its contents by the oral presentation, the document was disseminated without restriction to at least six persons, and whether the copies were freely distributed to interested members of the public was a key consideration in the analysis.

The Federal Circuit also pointed to Cordis Corp. v. Boston Scientific Corp., 561 F.3d 1319 (Fed. Cir. 2009), where the issue pertained to whether a set of research papers distributed by a doctor to certain colleagues and two commercial entities rendered the documents printed publications.  In that case, the Federal Circuit concluded that such documents were not publicly accessible since academic norms gave rise to an expectation that disclosures would remain confidential, and there was an expectation of confidentiality between the doctor and each of the two commercial entities.

Finally, the Federal Circuit identified In re Klopfenstein, 380 F.3d 1345, 1350 (Fed. Cir. 2004), where a reference in dispute was a printed slide presentation that was displayed prominently for three days at a conference to a wide variety of participants.  The reference was shown with no stated expectation that the information would not be copied or reproduced by those viewing it, but copies were never distributed to the public and never indexed.  In that the case, the Federal Circuit identified the relevant factors to include: (1) the length of time the display was exhibited, (2) the expertise of the target audience (to determine how easily those who viewed the material could retain the information), (3) the existence (or lack thereof) of reasonable expectations that the material displayed would not be copied, and (4) the simplicity or ease with which the material displayed could have been copied.  After reviewing these factors, the Federal Circuit determined that the reference was sufficiently publicly accessible to count as a “printed publication” for the purposes of § 102(b).

The Federal Circuit held that the size and nature of the meetings and whether they are open to people interested in the subject matter of the material disclosed are important considerations.  The Federal Circuit further held that another consideration is whether there is an expectation of confidentiality between the distributor and the recipients of the materials.

The Federal Circuit found that the Board did not fully consider all of the relevant factors.  For example, the Board did not address the potentially-critical difference between the SDSG meeting in Arizona and the programs in Colorado Springs and St. Louis, which were not limited to members of the SDSG but instead were attended by at least 75 other surgeons, collectively.  The Board’s analysis was silent on the distribution that occurred in the two non-SDSG programs.  Further, even if the Board were correct in its assumption that Medtronic only gave the Video and Slides to the SDSG members, it did not address whether the disclosures would remain confidential.

Accordingly, the Federal Circuit held that whether dissemination of the Video and Slides to a set of supremely-skilled experts in a technical field precludes finding such materials to be printed publications warrants further development in the record.  For these reasons, the Federal Circuit vacated the Board’s finding that the Video and Slides are not printed publications and remanded for further proceedings.

Practice Insights
Consider counseling inventors and clients regarding the appropriate factors to consider when presenting materials at conferences and distributing materials without a legal obligation of confidentiality.  It may be wise to file a provisional patent application before presenting or distributing materials related to an invention.  Also, one may enter non-disclosure agreements with parties viewing a presentation or receiving distributed materials.

Download Medtronic, Inc. v. Barry.

Steven E. Berkheimer v. HP Inc.

By Kenneth Kwan

March 28, 2018- In Steven E. Berkheimer v. HP Inc., 2017-1437 (Fed. Cir. Feb. 8, 2018), the Federal Circuit affirmed the district court’s summary judgment that claim 1 (among other claims) of U.S. Patent No. 7,447,713 (the ’713 Patent) is patent-ineligible under 35 U.S.C. 101, but reversed the district court’s summary judgment that claims 4 and 5 (among other claims) of the ’713 Patent are patent‑ineligible.

The ’713 Patent is directed to archiving files.  Different files can have portions (objects) that are the same.  A main aspect of the invention in the ’713 Patent is to archive files by linking the objects (that are in common) to one another, such that an update to one of the objects of one file can be reflected in linked objects of other files.

The specification of the ’713 Patent provides the following:

By eliminating redundancy in the archive 14, system operating efficiency will be improved, storage costs will be reduced and a one-to-many editing process can be implemented wherein a singular linked object, common to many documents or files, can be edited once and have the consequence of the editing process propagate through all of the linked documents and files. The one-to-many editing capability substantially reduces effort needed to up-date files which represent packages or packaging manuals or the like as would be understood by those of skill in the art.

Claims 1, 4, and 5 of the ’713 Patent read:

  1. A method of archiving an item comprising in a computer processing system:

presenting the item to a parser;
parsing the item into a plurality of multi-part object structures wherein portions of the structures have searchable information tags associated therewith;
evaluating the object structures in accordance with object structures previously stored in an archive;
presenting an evaluated object structure for manual reconciliation at least where there is a predetermined variance between the object and at least one of a predetermined standard and a user defined rule.

  1. The method as in claim 1 which includes storing a reconciled object structure in the archive without substantial redundancy.
  2. The method as in claim 4 which includes selectively editing an object structure, linked to other structures to thereby effect a one-to-many change in a plurality of archived items.

The Federal Circuit found that claim 1 is not patent eligible under 35 U.S.C. 101, since parsers and parsing functions are conventional in the art, the analysis and comparison of data, to reconcile differences between two objects, fail to transform the abstract idea into something patent-eligible, and the claim does not contain limitations that relate to the benefits of the invention.

In contrast, the Federal Circuit found that dependent claims 4 and 5 may be patent eligible, since these claims contain limitations relating to the benefits of the invention—i.e., the recitation “without substantial redundancy” in claim 4 and the recitation “to thereby effect a one-to-many change in a plurality of archived items” in claim 5 relate to the benefit of redundancy elimination, which leads to increased operating efficiency and reduces storage costs.

This opinion illustrates the potential importance of including claim limitations that directly relate to the technological improvements described in the patent’s specification, since this might help with the question of subject matter eligibility (particularly Step 2 of the Alice test).

Download Steven E. Berkheimer v. HP Inc.

Finjan, Inc. v. Blue Coat Systems, Inc.

By Timothy Hirzel

February 9, 2018- In Finjan, Inc. v. Blue Coat Systems, Inc., 2016-2520 (Fed. Cir. Jan. 10, 2018), the Federal Circuit found that claims of U.S. Patent No. 6,154,844 (‘844 patent) were directed to patent eligible subject matter under 35 U.S.C. § 101 (“101”).  This opinion provides insight on how the first step of Alice’s two-step test is applied and provides an example of claims that are not “directed to” an abstract idea under Step 1 of the Alice test.

A jury found Blue Coat infringed the ‘844 patent owned by Finjan and the District Court held, as a matter of law, that the ‘844 patent was patent eligible under 101.  Blue Coat appealed the subject-matter eligibility decision under 101 to the Federal Circuit.

The ‘844 patent recites a system and method for providing computer security by attaching a security profile to a downloadable (i.e., an executable application program).  Representative claim 1 of the ‘844 patent reads:

  1. A method comprising:

receiving by an inspector a Downloadable;

generating by the inspector a first Downloadable security profile that identifies suspicious code in the received Downloadable; and

linking by the inspector the first Downloadable security profile to the Downloadable before a web server makes the Downloadable available to web clients.

The Federal Circuit applied Alice’s two-step test and reiterated that under Step 1, the court determines whether the claims at issue are “directed to” a patent-ineligible concept, such as an abstract idea.  If they are, the court proceeds to Step 2 and determines whether the additional elements of the claims transform the nature of the claim into a patent-eligible application.

Starting at Step 1, the Federal Circuit first examined the ‘844 patent’s “claimed advance” to determine whether the claims are directed to an abstract idea or whether the claims focus on a specific asserted improvement in computer capabilities.  During claim construction, the “identif[y] suspicious code” feature was construed to be only satisfied if the security profile includes “details about the suspicious code in the received downloadable such as ‘all potentially hostile or suspicious code operations that may be attempted by the Downloadable.’”  Importantly, the Federal Circuit further stated that “[t]he security profile must include the information about potentially hostile operations produced by a ‘behavior-based’ virus scan,” as opposed to “code-matching” virus scans.  The question under Step 1 then became whether this behavior-based virus scan in the ‘844 patent constitutes an improvement in computer functionality.

The Federal Circuit determined the behavior-based virus scan was in fact an improvement to computer functionality.  Behavior-based scans are not limited to recognizing the presence of previously-identified viruses like code-matching scans.  Accordingly, the behavior-based scans can be used to protect against previously unknown viruses as well as “obfuscated code” known virus that attempt to avoid detection by code-matching scans.  Moreover, the Federal Circuit found that claim 1 “employs a new kind of file that enables a computer security system to do things it could not do before.”  For example, the security profile approach allows administrators to tailor access for different users and ensures potential threats do not reach a user’s computer.

The Federal Circuit distinguished this case from Intellectual Ventures v. Symantec Corp., which held virus screening by itself constitutes an abstract idea, because the claimed method in the ‘844 patent “does a good deal more” than conventional approaches to virus screening.  The Federal Circuit also distinguished the ‘844 patent from other cases that have held a result, even an innovative result, is not itself patentable because the ‘844 claims recite more than just the desired result.  Instead, the claims recite specific steps to accomplish the desired results, such as generating a security profile that identifies suspicious code and linking it to a downloadable.

Accordingly, the Federal Circuit found the claims of the ‘844 patent not to be abstract and affirmed the District Court.  Because the claims were not abstract, the Federal Circuit found no need to proceed to Step 2 of Alice.

This opinion illustrates the importance to subject matter eligibility under 101 of tying the claims to the asserted technical advance.  In this case, the advance was a new type of file that enabled new capabilities in a computer that could not be performed before.  This opinion also shows that claims should be drafted to do more than simply recite the desired result of the invention, but actually, recite specific steps to accomplish that result.  This opinion further illustrates the importance of claim construction because even though the claims did not recite “behavior-based” virus scanning, this feature was read into the claims and became an important factor in determining whether the claims constituted an improvement to computers.  Rather than relying on a court’s hopefully beneficial claim construction, patent applicants should carefully draft claims to capture necessary features to illustrate the technical improvement or advance.

Download Finjan v. Blue Coat.

Two-Way Media LTD v. Comcast Cable Communications, LLC, et al.

By William Gvoth

January 23, 2018 – In Two-Way Media LTD v. Comcast Cable Communications, LLC, et al., 2017 U.S. App. LEXIS 21706 (Fed. Cir. Nov. 1, 2017), the Court of Appeals for the Federal Circuit found that claims of various patents owned by Two-Way Media LTD were directed to ineligible subject matter under 35 U.S.C. § 101 (“101”).

This opinion provides insight into how claims may be construed and how this might impact an analysis of the claims under 101.

Four continuation patents were at issue: 5,778,187 (’187 patent), 5,983,005 (’005 patent), 6,434,622 (’622 patent), and 7,266,686 (’686 patent).  The patents relate generally to a system for streaming audio/visual data over a communications system like the Internet.  Claim 1 of the ’187 patent is representative of all the claims of the ’187 patent and the ’005 patent; claims 1 and 29 are representative of the ’622 patent; and claims 1, 22, 26, and 30 are representative of the ’686 patent.

As an example, and at a high level, claim 1 of the ’187 patent is generally directed to a method for:

  • Converting a plurality of streams of data into a plurality of streams of addressed digital packets;
  • Controlling the routing of the stream of packets in response to selection signals; and
  • Monitoring receptions of packets by the users and accumulating records.

The other representative claims are directed to similar methods or to systems with means plus function claiming similar to the previously described claim.

The common specification describes the invention as a scalable architecture for delivering real-time information (e.g., a distribution architecture integrated with a control architecture).  Embedded in the architecture is a control mechanism that provides for the management and administration of users who are to receive real-time information.  The specification also describes monitoring network conditions and generating records about real-time streams.

The Federal Circuit first analyzed the ’187 and ’005 patents.  Under Step 1 of the Alice test – the district court found that the claims of these patents are directed to the abstract idea of 1) sending information, 2) directing the sent information, 3) monitoring the receipt of the sent information, and 4) accumulating records about receipt of the sent information.  In analyzing this determination, the Federal Circuit stated that “claim 1 recites a method for routing information using result-based functional language…but does not describe how to achieve these results in a non-abstract way.”  Further, the Federal Circuit rejected proposed claim constructions, offered by Two-Way Media, that the claims are tied to the network architecture described in the specification.  In rejecting the proposed claim constructions, the Federal Circuit stated that the “constructions recite only conventional computer components.”

After affirming the analysis of the district court under step 1 of the Alice test, the Federal Circuit analyzed these claims under step 2 of the Alice test.  Under step 2, the district court “found no saving inventive concept” in the claims.  Although the district court acknowledged that the specification describes “a system architecture as a technical innovation,” the claim is not tied to the described architecture.  The Federal Circuit rejected Two-Way Media’s assertions that the “claim solves various technical problems” because the claim recites generic functional language to solve these problems.  In addition, the Federal Circuit stated that the claim does not require anything other than conventional technology and that the claim merely recites a conventional ordering of steps.

After analyzing the ’187 and ’005 patents, the Federal Circuit analyzed the ’622 patent and ’686 patent under the Alice test.  For these patents, the district court concluded that the ’622 patent was directed to “the abstract idea of monitoring the delivery of real-time information to a user…and that the ’686 patent was directed to the abstract idea of measuring the delivery of the real-time information for commercial purposes.”  It is worth noting that the district court, in part, based its conclusion on the preamble of the claims at issue.  The Federal Circuit found no error in the district court citing the preamble in its review.  The Federal Circuit then concluded that the claims are “directed to monitoring the delivery of real-time information to user(s) or measuring such delivery for commercial purposes.”

Under step 2 of the Alice test, the Federal Circuit reviewed the district court’s finding that the claims of the ’622 and ’686 patents did not contain an inventive concept.  Similar to the claims discussed above, the Federal Circuit disagreed with the argument that the district court failed to account for the system architecture and failed to give weight the “nonconventional arrangement of components” of the system architecture.  The Federal Circuit agreed with the district court, stating that the claims do not include an inventive concept.  For example, the claims recite use of an “intermediate computer” and an “intermediate server.”  The Federal Circuit stated that these components are “conventional computer and network components operating according to their ordinary functions.”  Further, the Federal Circuit stated that the steps of the claims “are organized in a completely conventional way – data are first processed, sent, and once sent, information is recorded” and “fail to describe a ‘specific, discrete implementation of the abstract idea’ sufficient to qualify for eligibility under 101.”

One of the main takeaways from this opinion is that even though the specification of the patents at issue arguably recited a novel concept (e.g., a novel system architecture), the claims were not tied sufficiently to that novel concept.  This opinion highlights the importance of the relationship between the claims and the specification with regard to a 101 analysis.  It shows that it may be difficult to argue that broad terms used in the claims are tied to novel concepts described in the specification, unless those broad terms are explicitly, or very clearly, tied to the novel concepts.  For example, for purposes of a 101 analysis and with regard to this opinion, reciting generic devices in the claims, such as an “intermediate server” or an “intermediate computer,” may not sufficiently tie the claims to a novel system architecture described in the specification unless the specification or the claims describe the relationship between the terms and the novel concepts.

Download Two-Way Media LTD v. Comcast Cable Communications, LLC, et al. 

Changes in Patent Language to Ensure Eligibility Under Alice

By Peter Glaser and William Gvoth

December 6, 2017- When a rule becomes a target, it ceases to be a good rule.  In the three years since the Supreme Court issued its opinion in Alice, there have been positive changes to patent applications, but there remains a long-term risk that patent practitioners will use tricks to beat the Alice test.  Here, we focus on the changes to patent applications by drafters, as well as changes to patent applications that have issued since Alice.

*Please note, citations were inadvertently omitted from the original publication of this article. Please contact the authors, directly, to obtain a version of this article including citations*


Trading Technologies International, Inc. v. CQG, Inc.

By William Gvoth

November 16, 2017- Trading Technologies International, Inc. v. CQG, Inc. relates to abstract ideas under § 101.  In Trading Technologies, two patents were at issue: U.S. Patent Nos. 6,772,132 (’132) and 6,766,304 (’304) (referred to collectively as “patents”).  These patents shared a common specification and related to a method and a system for electronic trading of stocks, bonds, futures, options and similar products.  The patents describe a problem that arises when a trader attempts to enter an order at a particular price but misses the price because the market moved before the order was entered.  The patents describe implementations that reduce the time it takes for a trader to place a trade when electronically trading on an exchange and that improve the way information is displayed to the trader.  For example, the implementations display market depth, which moves visually up/down and left/right as the market for a product fluctuates.  In addition, the implementations described in the patents permit a user to place an order for a product via a click on a user interface.

Trading Technologies appealed, to the Federal Circuit, the decision of the District Court for the Northern District of Illinois (District Court), finding that the patents were directed to patent-eligible subject matter under the two step test from Alice Corporation Pty. Ltd. v. CLS Bank International (Alice), 573 U.S., 134 S. Ct. 2347 (2014).  The Federal Circuit affirmed.

To analyze the patent eligibility of the patents, the Federal Circuit selected claim 1 of the ’304 patent as the representative claim.  At a high level, claim 1 of the ’304 patent was directed to “a method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange…on a graphical user interface” that comprised dynamically or statically displaying various information and submitting a trade based on a user selection of a portion of the user interface.

The Federal Circuit analyzed the District Court’s analysis of the representative claim under the two step test from Alice.  Under the first step, the Federal Circuit reviewed, and agreed with, the District Court’s findings that the patents solve problems of prior graphical user interface devices used for computerized trading.  Specifically, the Federal Circuit stated that “the patents describe a trading system in which a graphical user interface ‘display[s] the market depth of a commodity traded in a market” including various static and dynamic displays and this graphical user interface solves “‘problems of prior graphical user interface devices…relating to speed, accuracy and usability.’”  Further, the Federal Circuit referenced the District Court’s findings that “the challenged patents do not simply claim displaying information on a graphical user interface” but rather “require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art.”  Based on the reasons stated by the District Court, the Federal Circuit agreed that the patents presented patent-eligible subject matter.

The Federal Circuit then analyzed the District Court’s analysis of the representative claim under the second step of the test from Alice and concluded that the District Court correctly “determined that the challenged claims recite an ‘inventive concept.’”  The Federal Circuit agreed with the District Court’s identification of the feature of “the static price index as an inventive concept” that permits more efficient and accurate trade placement when using electronic trading systems.  In addition, Federal Circuit agreed with the District Court’s distinction of the trading system from a conventional computer or the Internet based in part on the idea that the trading system presents “specific technologic modifications to solve a problem or improve the functioning of a known system.”

One of the main takeaways from the Federal Circuit’s analysis is that the claimed graphical user interface addresses specific problems with prior art graphical user interfaces in electronic trading.  In other words, the claimed invention includes an improvement to the functioning of technology and steps that address a specific problem.  This decision highlights the importance of framing a problem solved by an invention in technical terms and then presenting claims that solve the problem.

Download Trading Technologies International V CQG Inc.

Practice Insights in the Wake of Visual Memory LLC v. NVIDIA Corp.

By Sean Quinn & Peter Glaser

August 25, 2017- In Visual Memory LLC v. NVIDIA Corp. (Fed. Cir. Aug. 15, 2017), a divided panel at the Federal Circuit determined that U.S. Patent No. 5,953,740 is not directed to an abstract idea.

The decision provides a positive result in the context of software-based inventions, and provides a few insights regarding potential patent drafting strategies.  Namely, the decision highlights the importance of focusing the specification on improvements to hardware components, and bolsters the importance of mentioning technical benefits wherever appropriate.  

The ‘740 patent teaches a memory system having programmable operational characteristics that are capable of being configured for use with multiple different types of processors without causing a reduction in performance ostensibly present in the prior art computer systems.  This enables the memory system to be used efficiently with multiple types of processors, rather than only with a single type of processor.  Further, the ‘740 patent claims a computer memory system comprising a main memory, a cache, and programmable operational characteristics that determine a type of data stored by the cache.

On appeal from a district court’s grant of NVIDIA’s motion to dismiss based on the asserted claims being directed to patent -ineligible subject matter, Judge Stoll, writing for the majority, stated that “[courts] must articulate with specificity what the claims are directed to (citing Thales Visionix Inc. v. United States),” and “ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea (citing Enfish LLC v. Microsoft).”  (Opinion at 7).

Using Enfish and Thales as guidance, the majority stated that the ‘740 patent’s claims are directed to an improved computer memory system rather than to an abstract idea of categorical data storage and  mentioned that claim 1 of the ‘740 patent requires a memory system “having one or more programmable operational characteristics, said characteristics being defined through configuration by said computer based on the type of said processor,” and “determin[ing] a type of data stored by said cache.”  (Opinion at 9).  Further, the  majority stated that dependent claims 2 and 3, respectively, narrow the memory system’s programmable operational characteristic to storing certain types of data and buffering data from certain sources and that none of the claims recite all types and all forms of categorical data storage.

The majority noted that the ‘740 patent’s specification mentions various technical benefits associated with the memory system, such as permitting different types of processors to be installed with the subject memory system without significantly compromising their individual performance, obviating the need to design a separate memory system for each type of processor, avoiding the performance problems of prior art memory systems, enabling interoperability with multiple different processors, and outperforming prior art memory systems having larger cache sizes.

Analogizing the ‘740 patent to the self-referential table in Enfish and the motion tracking system in Thales, the majority noted that the ‘740 patent’s claims are directed to a technological improvement and focus on a specific asserted improvement in computer capabilities rather than a process that qualifies as an abstract idea for which computers are invoked merely as a tool.  Further, the majority noted that the specification of the ‘740 patent discusses the advantages offered by the proffered technological improvement.  

Juxtaposing the ‘740 patent and the claims in Content Extraction & Transmission LLC v. Wells Fargo Bank and In re TLI Communications LLC Patent Litigation, the majority noted that the ‘740 patent recites an ostensibly new, improved, and more efficient memory system as opposed to claims that are not directed to an improvement in computer functionality and cover abstract ideas operating on generic hardware.

In dissent, Justice Hughes posited that the ‘740 patent fails to describe how the invention’s purpose is achieved, fails to describe how to implement the programmable operational characteristic, requires a third party to supply the innovative programming, and, as such, is not properly described as being directed to an improvement in computer systems.

In response, the majority identified three flaws with Justice Hughes’s posit.  

First, the majority noted that the ‘740 patent includes an appendix having 263 frames of code, and noted that the assumption that the code does not teach a person of ordinary skill in the art was improper at the stage of reviewing a Rule 12(b)(6) motion, where all factual inferences must be drawn in favor of the non-moving party.

Second, the majority noted that the question of whether a patent specification teaches a person of ordinary skill in the art how to implement the claimed invention presents an enablement issue under 35 U.S.C. § 112 rather than an eligibility issue under § 101.  Further, the majority noted that the implementation details regarding how to configure a programmable operational characteristic may very well fall within the routine knowledge of persons having ordinary skill in the art and, as such, may have been permissibly omitted.  

Third, the majority noted that Justice Hughes’s assumption that the innovative effort in the ‘740 patent lies in the programming required for a computer to configure a programmable operational characteristic of a cache memory was misplaced.  In support, the majority noted that the assumption was inconsistent with the ‘740 patent’s specification and claims, which expressly state that the improved memory system is achieved by configuring a programmable operational characteristics of a cache memory based on the type of processor connected to the memory system.

In closing, the majority refrained from proceeding to step two of the Alice test because of the finding that the claims of the ‘740 patent are not directed to an abstract idea.   

Going forward, the decision provides some instruction regarding potential patent drafting and prosecution strategies regarding software-based inventions and § 101 issues.  For example, the decision highlights the importance of directing the specification and claims to improvements in computer systems, and the importance of mentioning technical benefits provided by the invention wherever feasible.  Moreover, the case highlights a distinction that can be drawn between enablement and eligibility.

Download Practice Insights in the Wake of Visual Memory LLC v. NVIDIA Corp.


Analysis of December 2016 USPTO Subject Matter Eligibility Examples

By Kris Rhu & Paul Gurzo

March 20, 2017- On December 15, 2016, the USPTO published three subject matter eligibility examples focusing on business method claims, which can be found here.  The purpose of these examples is to give guidance on how claims should be analyzed using the 2014 Interim Guidance on Subject Matter Eligibility, recent Supreme Court and Federal Circuit decisions, and recent Memorandums published by the USPTO.  These examples seem to indicate that the power of §101 to restrict patentability has been whittled down since Alice and that the USPTO would like to reduce the number of §101 rejections for technological claims in light of court decisions post-Alice.  Below, we describe each example provided by the USPTO, explain the USPTO guidance for each example, and provide practical practice tips that practitioners can use to help reduce or overcome §101 rejections.


Alice on Dulany Street: How the PTAB Handles 101 in Ex Parte Appeals

By Eli Mazour & James Bennin

February 15, 2017- “The outlook has become only more grim for appellants who are hoping that the PTAB will overturn a § 101 rejection.”

Previously, we analyzed ex parte appeal decisions by the Patent Trial and Appeal Board (PTAB) from the year following the Alice v. CLS Bank decision. At the time, we concluded that the PTAB is unlikely to reverse § 101 rejections based on Alice. We decided to revisit this conclusion based on ex parte appeal decisions from December 2016.


Drafting Software Patents Amidst the Heightened Standard: The Alice v. CLS Bank Aftershock

September 28, 2016 – Nathan Phares was part of a panel of speakers that discussed software patents in the aftermath of Alice v. CLS Bank. He provided insights and recommendations regarding post-Alice case law, drafting strategies in view of recent software eligibility decisions, and winning prosecution techniques for software patents.

For over 10 years, The Knowledge Group has produced thousands of best in class educational webcasts for a variety of industries and professions including legal, tax, accounting, finance, human resources, risk/compliance, and many others.

Click HERE to order recording of the webinar.

Nathan Phares