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Article: August 2016: Life Sciences Litigation Update

August 01, 2016
Business Litigation Reports

Enfishing for Guidance: The Federal Circuit’s Recent Section 101 Jurisprudence. As two recent decisions from the Federal Circuit demonstrate, the law on patent-eligible subject matter, 35 U.S.C. § 101, remains largely unsettled. These decisions, Enfish and TLI Communications, represent some of the Federal Circuit’s most recent attempts to grapple with the appropriate application of § 101. Although these decisions are both software patent cases, they speak to issues that affect § 101 jurisprudence across a wide range of technologies, from software to diagnostic procedures to molecular biology protocols. In particular, Enfish and TLI Communications embody the recent judicial tendency to collapse the § 101 inquiry into the novelty inquiry under 35 U.S.C. §§ 102 and 103.

A trio of Supreme Court cases, Alice, Mayo, and Myriad, has left the district courts and the Federal Circuit with little concrete guidance on how to fashion the law going forward. This trio of cases has established a two-part test for patent eligibility under § 101. As a threshold inquiry, the court must determine whether the claims at issue “are directed to a patent ineligible concept.” Laws of nature, natural phenomena, and abstract ideas are not patentable. If the threshold requirement is satisfied, the court must then assess whether additional claim elements transform the claim into one that covers patent-eligible subject matter.

Enfish and TLI Communications center on the issue of whether the threshold inquiry is met and whether the potentially patent-ineligible material at issue is an abstract idea. The problem is that many patents covering technical subject matter embody abstract ideas. The Federal Circuit noted in Enfish that, while many patents may “involve” a patent ineligible abstract idea, the Supreme Court test asks not only whether the claims “involve” patent ineligible subject matter, but also whether they are “directed to” such subject matter. See Enfish, LLC v. Microsoft Corp., No. 2015-1244, 2016 WL 2756255, at *4 (Fed. Cir. May 12, 2016). Although on its face, this analysis does not appear to implicate issues of novelty, the Federal Circuit cited supporting precedent involving an inquiry “into ‘the focus of the claimed advance over the prior art.’” Id. (citing Genetic Techs. Ltd. v. Merial L.L.C., 2016 WL 139573, at *5 (Fed. Cir. 2016)) (emphasis added). But that standard sounds a lot like the novelty analysis of §§ 102 and 103.

In fact, the entire Enfish analysis appears to have been driven by the Federal Circuit’s view that the claims at issue were directed to “an improvement to the way computers operate,” and therefore did not impermissibly claim an abstract idea. Id. at *5 (emphasis added). The key element of the patent claims at issue was a “self-referential table” for data storage and retrieval, which allowed new columns to be added to the table by adding rows specifying the fields or parameters for each new column. The Federal Circuit distinguished these claims from prior software claims that had been found patent ineligible on the grounds that those earlier claims could be understood “as simply adding conventional computer components to well-known business practices.” Id. at *7. In contrast, according to the Federal Circuit, the claims at issue in Enfish were “directed to an improvement in the functioning of a computer.” Id. Again, the analysis contrasted ineligible “conventional” computer components with the patent-eligible “improvement” claims. The Federal Circuit held that the claims in Enfish were patent eligible because they were not directed to an abstract idea.

The TLI Communications decision, issued the following week, applies a similar analysis to reach the opposite conclusion. Here, the Federal Circuit found “that the claims are directed to the abstract idea of classifying and storing digital images in an organized manner and fail to add an inventive concept sufficient to confer patent eligibility.” In re TLI Communications LLC Patent Litigation, No. 2015-1372, 2016 WL 2865693, at *1 (Fed. Cir. May 17, 2016). The claims at issue in TLI Communications involved assigning classification data (a date or time stamp) to digital images and sending them to a server, which then extracts the classification data and stores the images, “taking into consideration the classification information.” Id. at **1-2.

In its analysis, the Federal Circuit gave a nod to its new Enfish standard, stating, “We recently clarified that a relevant inquiry at step one is ‘to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.’” Id. at *3 (citing Enfish). But in TLI Communications, the Federal Circuit held the claims to be directed to the abstract idea of “classifying and storing digital images in an organized manner.” Id. at *5. According to the Federal Circuit, “attaching classification data, such as dates and times, to images for the purpose of storing those images in an organized manner is a well-established ‘basic concept’ sufficient to fall under Alice step 1.” Id. As in Enfish, the subtext of novelty appears to inform the § 101 analysis.

Moving on to step two, the Federal Circuit in TLI Communications rejected the argument that fact finding was necessary to determine whether the additional claimed elements were “conventional.” See id. at *6. Instead, the Federal Circuit relied on the specification to find that the claimed elements, including a “telephone unit” and “server,” failed to add an inventive concept to the claimed abstract idea. See id. The Federal Circuit stressed the absence of sufficient detail to carry out the abstract idea to which the claims were directed. Id. at *7. Holding the claimed subject matter patent ineligible, the Federal Circuit concluded, “In sum, the recited physical components behave exactly as expected according to their ordinary use.” Id.

The extent to which Enfish carved out a class of patent-eligible software claims remains to be seen. More recently, the Federal Circuit vacated a decision of the Northern District of Texas invalidating a software patent on § 101 grounds, and remanded for further proceedings. See Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, No. 2015-1763 (Fed. Cir. June 27, 2016). The patent claims at issue in Bascom involved a method of filtering content on the internet using filters customized to a given user at a remote server. According to the Federal Circuit, this case presented a “closer call” than Enfish in terms of step one of the § 101 analysis, the “abstract idea” inquiry. See id. at 13. The court therefore reached step two, the “inventive concept” inquiry. See id. The Federal Circuit found that the concept of installing a filtering tool at a location remote from end users with customizable filtering features specific to each end user, was inventive. See Id. at 16. Therefore, because this inventive concept transformed the abstract idea of filtering content into a “particular, practical application of that abstract idea,” the claims were patent eligible. See id. at 20. For students of § 101 jurisprudence across a wide range of technologies, the takeaway continues to be that the more novel and detailed the claims, the less “abstract,” and the more patent eligible they will be.