Federal Circuit Limits Applicability of “Abstract Idea” to Claims Directed to “Improvement to Computer Functionality Itself”

Federal Circuit Limits Applicability of “Abstract Idea” to Claims Directed to “Improvement to Computer Functionality Itself”
May 17, 2016

Summary

The Federal Circuit has issued a decision in Enfish, LLC v. Microsoft Corp., No. 2015-1244 (Fed. Cir. May 12, 2016) reversing (in-part) a district court decision and, instead, holding that claims directed to “self-referential” database technology constitute patent-eligible subject matter under 35 U.S.C. § 101 and the Supreme Court’s 2014 framework set forth in Alice Corp. Pty Ltd. v. CLS Bank Int’l, ___ U.S. ___, 134 S. Ct. 2347, 2355 (2014). In doing so, the Federal Circuit breathed life into the first step of the Alice framework that had rarely shielded patent claims from potential invalidation under Alice.

 

The Technology at Issue

In contrast to the traditional “relational” database model that utilizes multiple database tables (one for each type of entity such as a person, company and document) including records that reference data in other tables and require considerable planning to effectively implement, the “self-referential” database model developed by plaintiff-appellant Enfish can store all entities in a single table and define the table’s columns by rows in the same table.  (The decision provides a more detailed explanation of both database models including diagrams adapted from one of Enfish’s patents-in-suit.)  Advantageously, the claimed technology allows for (1) faster searching than in relational models, (2) more effective storage of data such as images and structured text, and (3) more flexibility in configuring a database (e.g., on-the-fly).

 

The District Court Decision

Enfish sued Microsoft alleging that Microsoft’s ADO.NET product infringed U.S. Patent Nos. 6,151,604 and 6,163,775.  The U.S. District Court for the Central District of California entered summary judgment holding (among other rulings) that the asserted claims were invalid under Section 101 as directed to an abstract idea. 

 

The Federal Circuit’s Analysis of the Abstract Idea Exclusion

Under the Supreme Court’s Alice decision, the Federal Circuit, district courts, and the U.S. Patent and Trademark Office employ a two-step process for assessing whether claims are directed to patentable subject matter under Section 101:

  1. “determine whether the claims at issue are directed to a patent-ineligible concept” and
  2. “consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.”

In assessing the Enfish claims, the Federal Circuit cited the two-step approach articulated by the Supreme Court as implying that the first step must be “a meaningful one.”  Stated another way, the Federal Circuit observed that “a substantial class of claims are not directed to a patent-ineligible concept.”  The Federal Circuit further noted the Supreme Court’s suggestion in Alice that “claims ‘purport[ing] to improve the functioning of the computer itself,’ or ‘improv[ing] an existing technological process’ might not succumb to the abstract idea exception.”  Although the quoted Supreme Court discussion occurred in the second step of the Alice inquiry, the Federal Circuit noted that the patentee’s acknowledgement in Alice that the claims “describe intermediate settlement” removed any need for a detailed discussion of the first step of the Alice inquiry by the Supreme Court. Offering a full-throated defense of software patent claims, the Federal Circuit stated:

We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two.  Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly not abstract, such as a chip architecture, an LED display, and the like.  Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis.

Moving to the claims on appeal in Enfish, the panel framed the first step of the Alice inquiry as “whether the focus of the claims is on the specific asserted improvement in computer capabilities (i.e., the self-referential table for a computer database) or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool.” The panel noted that in “virtually all of the computer-related § 101 cases” issued by the Federal Circuit post-Alice, “it was clear that the claims were of the latter type—requiring that the analysis proceed to the second step of the Alice inquiry.”

However, the panel found that the focus of the Enfish claims on appeal is “on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity,” and thus, satisfied the first step of the Alice test. 

In reaching this decision, the Federal Circuit rejected the characterization of the district court that the claims “were directed to the abstract idea of ‘storing, organizing, and retrieving memory in a logical table’ or, more simply, ‘the concept of organizing information using tabular formats.’”  The panel held that this interpretation (as well as Microsoft’s slightly more nuanced characterization) described the claims “at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to § 101 swallow the rule.”  Instead, the court noted that, “the claims are not simply directed to any form of storing tabular data, but instead are specifically directed to a self-referential table for a computer database.”

Finally, the Federal Circuit also declined to draw any negative inference from the claimed invention’s ability to run on a general-purpose computer.  In doing so, the Federal Circuit distinguished the claimed invention from the claims in Alice because the claimed invention is directed “to an improvement in the functioning of a computer” as opposed to the “simply adding conventional computer components to well-known business practices” in Alice. After making this distinction, the panel noted that:

Much of the advancement made in computer technology consists of improvements to software that, by their very nature, may not be defined by particular physical features but rather by logical structures and processes. We do not see in Bilski or Alice, or our cases, an exclusion to patenting this large field of technological progress.

The Current Landscape for Computer-Implemented Inventions

Although this decision represents a single fact pattern for application of the first Alice step, it provides support for patent applicants and patentees to potentially streamline Section 101 reviews of computer-implemented inventions. Moreover, favorably resolving the Alice Section 101 analysis in the first step avoids the taint of having claims deemed to be directed to an abstract idea in the first step before needing to convince a judge or examiner that the claims are sufficiently transformative in the second step.

Moreover, even claims that are more business-focused than those in Enfish should benefit from the Federal Circuit's rejection of the district court's and Microsoft's framing of the alleged abstract idea, which addresses a recurring tension in both prosecution and litigation that almost any claim can be made to seem impermissibly abstract when framed at a sufficiently remote level.

In conclusion, the Enfish decision provides a positive decision that applicants and patentees can cite in seeking to obtain and defend claims directed to computer-implemented inventions.  In this regard, the Enfish decision is an important counterweight to the many post-Alice decisions that provided examples of claims that were not patentable under Alice, and stands alongside the Federal Circuit’s 2014 DDR Holdings decision upholding claims under step two of the Alice inquiry. DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).

In view of the continuing legal developments regarding the patentability of computer-implemented inventions, applicants and patentees continue to be well-served by developing a patent portfolio that tells the technical story behind inventions that may also have business-facing applications. Such claims will be best positioned to invoke Enfish and satisfy the first step of the Alice inquiry or, failing that, fare best under the second step (e.g., through analogy to the DDR Holdings decision).

Saul Ewing attorneys regularly assist clients with drafting and prosecuting patent applications in the software field. If you have any questions about this Client Alert or would like more information, please contact Greg Bernabeo, Brian Landry, one of the other attorneys in our intellectual property practice, or the attorney in the Firm with whom you are regularly in contact.

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