Recent Cases Show Federal Circuit Is Concerned About ‘Over Abstracting’ Rejections of Method/ Process Patents
In one of its latest opinions attempting to parse precedent on the subject matter eligibility of software, method of use, and business method patents that arguably involve application of laws of nature or recitations of well-known, conventional methods and techniques, the U.S. Court of Appeals for the Federal Circuit found that a patent directed to a method for administering a naturally occurring beta amino acid to cause an increase in the concentration of a naturally occurring amino acid combination in muscle and brain tissues was subject matter eligible for patent protection (Natural Alternatives Int’l, Inc. v. Creative Compounds, LLC, No. 18-1295, 2019 U.S. App. LEXIS 7647 (Fed Cir. March 15, 2019). The panel’s 2-1 majority decision conceded that the claims at issue involved laws of nature and had similarities to claims the U.S. Supreme Court had found subject matter ineligible but found that the claims possessed sufficient inventiveness beyond natural phenomenon and conventional methods to make them subject matter eligible for patent protection.
Reflecting on the Debate
The legal debate and controversy over subject matter eligibility of inventions that arguably involve application of laws of nature and conventional methods is rooted in the interpretation of Section 101 of the Patent Act, which specifically allows four patent protectable categories: processes, manufacturers, machines, and compositions of matter. However, under long-established Supreme Court interpretation of Section 101, there are three specific exceptions to patent eligible subject matter coverage of §101: laws of nature, physical phenomena, and abstract ideas.
Until early this decade, there had been surprisingly few Supreme Court decisions on interpreting Section 101, leaving the laboring oar of standard setting to the Federal Circuit, which has sole jurisdiction over all patent appeals. In 1972, the Supreme Court decided Gottschalk, in which it held that process claims directed to mathematical formulae implemented by a computer do not meet the eligibility requirements of Section 101. After a very long hiatus, in 2010, the Supreme Court decided to step in and resolve a U-turn by the Federal Circuit between 1998 and 2008 regarding patent eligibility of business methods. In Bilski the Court confirmed subject matter eligibility of business method inventions but also made clear that subject matter eligibility analysis for all method/process patents must be conducted under Section 101.
However, despite establishing that precedent, Bilski did not provide a clear framework for distinguishing patent eligible subject matter from ineligible subject matter on close calls. Mayo, decided two years after Bilski, aimed to provide such a framework by setting forth a two-part test for or distinguishing method/process patents that arguably claim abstract ideas, natural occurrences, or conventional practices from claims directed to patentable applications of those otherwise patent ineligible subjects. The Supreme Court affirmed this two-part test in 2014 in Alice. The first prong of what has since become known as the “Alice test” inquires into whether the patent claims are directed to one of the three patent-ineligible subject matters: laws of nature, abstract ideas, and natural phenomena. A negative determination as to step one will end the subject matter eligibility inquiry. If the step one inquiry does result in a determination that the claims are subject matter ineligible, then the Alice test analysis moves to step two, which seeks to find whether the claimed invention includes a step or a combination of steps, which would transform the otherwise ineligible invention to become patent eligible.
The Tide Turns
Since Alice, the Federal Circuit and the federal district courts have been striving to implement and apply the Alice test to methods of use, software, and business method inventions that arguably involve applications of laws of nature and conventional methods. The challenge for the court in these cases has been to determine whether the claims sufficiently go beyond applications of laws of nature and known conventions to qualify as subject matter eligible for patent protection under Section 101. The Federal Circuit has found an inventive concept in several such cases. In DDR Holdings the Federal Circuit found that claims that addressed the Internet problem of ads that lure visitor traffic away from the host website had an inventive concept because the claims were specific enough as to how interactions with the Internet are manipulated, to yield a desired result. Similarly, in the Data Engine Technologies LLC, v. Google LLC decision, the Federal Circuit affirmed that a specific method for navigating through three-dimensional electronic spreadsheets was subject matter eligible as it provided a specific solution to a specific technological problem in conventional techniques. Then, late in 2018, the Federal Circuit decided Voter Verified Inc., in which it rejected patent eligibility for claims directed to voting, verifying the vote, and submitting the vote for tabulation, as involving little more than a recitation of steps that have been long known and conventional.
Based on precedent by the Supreme Court and the Federal Circuit since 2010, it is now clear that inventions directed to software, method of use, and business methods that arguably involve application of laws of nature or recitations of well-known, conventional methods and techniques have a fair chance of withstanding subject matter eligibility scrutiny if carefully screened prior to filing and properly claimed to clearly identify the inventive step beyond the natural law and conventional techniques.