Alice Update–Patentability of Software-Related Inventions– Enfish v. Microsoft

By Mitchell S. Feller

In 2012, the Supreme Court stated that 35 U.S.C. § 101 impliedly bars patents on “‘laws of nature, natural phenomena, and abstract ideas.’” Mayo Collaborative Servs. v. Prometheus Labs., Inc.  In 2014, building on its decision in Mayo, the Supreme Court set forth a two-part test for determining whether a patent claim directed to a computer-implemented invention is patent eligible under Section 101: (1) Determine whether the claim is directed to an abstract idea; (2) If so, determine if the claim recites significantly more than the abstract idea itself. Alice Corp. v. CLS Bank, 134 S. Ct. 2347 (2014).

While the Supreme Court acknowledged in Alice that at some level “all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas,” it did not provide guidance on how to find the boundary between what is and is not an abstract idea in the context of Section 101. Since Alice, courts and litigants have struggled to define how abstract a claim needs to be under step one of the Alice test, with at least one court comparing identifying whether a claim was directed to an abstract idea with the famous test for pornographic material–I’ll know it when I see it. (See, McRO, Inc. v. Namco Bandai Games Am. Inc., 2014 U.S. Dist. Lexis 135212, at *17-18 (C.D. Cal. Sep. 22, 2014)) In many instances, courts addressing software and computer-implemented inventions have taken a very broad view of abstractness in step one of Alice. Although patents are presumed valid and ordinarily the burden to demonstrate invalidity is on the challenger, the result of broadly viewing most software claims as directed to an abstract idea has been to put the burden on the patent owner to show that claims meet the “significantly more” prong.

Until now, only one patent survived an Alice challenge on appeal, meaning that in every other relevant case the claims were considered to be directed to an abstract idea and without having “significantly more.” In DDR Holdings v., the Federal Circuit held that a method for navigating between websites during on-line shopping was patent-eligible subject matter because the claim was “necessarily rooted in computer technology to overcome a problem specifically arising in the realm of computer networks.” While finding the claim was patent-eligible under Section 101, the Court’s analysis blurred the lines between steps one and two of the Alice test.

On May 12, 2016, a second Federal Circuit decision issued in which a patent case survived an Alice challenge.  In Enfish, LLC v. Microsoft Corp., the patent claims were directed to a “self-referential” computer database. Finding that the claims were not abstract, the Court clearly stated that software is not “inherently abstract”. It further explained the application of step one of the Alice test must be meaningful so that “a substantial class of claims are not directed to a patent-ineligible concept.” (emphasis by the Court). Otherwise, most of the patent claims being analyzed would simply be “swallowed” by “a high level of abstraction … untethered from the language of the claims,” and bumping the analysis to step two almost by default.

The Court stated that the inquiry in step one of Alice should be whether the claimed invention provides an “improvement in computer capabilities” rather than invoking computers “merely as a tool.” Applying this test, the Court found that the claims were not abstract because they were directed to an improvement to methods for storing and referencing information in a database. In support of this conclusion, the Court relied on the specification that stated that the invention provided “increased flexibility, faster search times, and smaller memory requirements.” Enfish thus confirms that that improvements in computer technology may indeed be patentable in view of Alice and provides more guidance in how to evaluate abstractness under step one of the Alice test.

In contrast, a week after deciding Enfish, the Federal Circuit held in TLI Communications LLC v. AV Auto., LLC et al that a claim directed to capturing digital images using a cell phone and storing them based on a classification system was invalid under Alice. The Court concluded that the claims were directed to the abstract idea of classifying and storing digital images in an organized manner and that the focus of the invention was not directed to any improvement to computer components themselves. The Court also held that the claims did not recite ‘significantly more’ as required by step two of the Alice test.

Other cases pending before the Federal Circuit are also addressing questions about how to determine whether a software claim is directed to an abstract idea. For example, in McRo, Inc. v. Bandai Namco Games America, the Court is considering whether patents to automatic three-dimensional lip-synchronization for animated characters recite patent-eligible subject matter.  The District Court held that the claims were invalid for claiming the abstract idea of using rules to create computer animation, noting that the patent only discussed the automated rules “at the highest level of generality.” A decision is expected shortly.

While many challenges still exist when addressing the patentability of software-based patents, Enfish provides an improved framework for addressing step one of the Alice test and helps counter a court’s temptation to apply a broad statement of abstractness and simply move on to step two of Alice. There are many different ways in which an invention may provide an improvement in computer capabilities. For example, does the claimed invention increase speed, reliability, or security? Does the invention allow use of less memory, fewer CPU cycles, or less power? Does it increase flexibility of the system, or make updates or repairs to the system easier? Patent owners being challenged should consider any disclosures in the specification about how the claimed invention provides an improvement to the operation of any parts of the system. Any affirmative answers direct away from a finding that the claimed invention is abstract. Similarly, those seeking patents should provide details in the specification describing how the invention provides an improvement to computer capabilities or other efficiencies.

Since Alice, many courts have addressed invalidity under Section 101 early in the pleadings stage in response to a motion to dismiss. When addressing such a motion, the issues are evaluated based only on the pleadings. Expert testimony is not permitted and claim construction has often been deemed unnecessary. In response to Enfish, parties may now argue that expert testimony is needed to address how the claims improve existing technology, and so are not abstract. This may provide a basis to argue that an early Alice determination is improper and that a court should defer a decision until later in the case. Likewise, claim construction may be needed to determine whether the claims are actually directed to a “specific” or “concrete” improvement to the underlying computer system.

It is likely that litigants and the courts will be wrestling with the correct methodologies for determining if a patent is directed to an abstract concept for some time. However, decisions such as Enfish provide a better framework within which to operate and therefore more certainty moving forward.