Two Recent Decisions Put Alice "Step One" on Center Stage at The Federal Circuit

On May 12 and May 17, 2016, the Federal Circuit issued decisions in two § 101 cases, EnFish, LLC v. Microsoft Corp. and In re TLI Communications, LLC. Both authored by Judge Hughes, the decisions illustrate the difficult process of determining where to draw the line between a claim that is directed to an “abstract idea” under step one of the Alice framework, and one that is not.

In Enfish, the court considered claims of two patents directed at “an innovative logical model for a computer database.” (Slip Op. at 2.) As opposed to a “relational database” traditionally employed in computer software – in which each category of data is stored in a separate table and those separate tables are cross-referenced to identify a piece of information with certain attributes – the patents-in-suit claimed a “self-referential” database. This model includes all data entries in a single table and can define the columns of the table using rows in that same table. The patents disclosed that the design of this “self-referential” database allowed for faster searching of data than would have been possible with the relational model, more effective storage of data other than text (such as images), and more flexibility in configuring the database.  (Slip. Op. at 7.)

The district court granted Microsoft’s motion for summary judgment of invalidity of the asserted claims under § 101 as directed to an unpatentable abstract idea. At Alice “step one,” the district court concluded that the claims were directed to the abstract idea of “storing, organizing, and retrieving memory in a logical table” or “the concept of organizing information using tabular formats.” (Slip. Op. at 14.)

On appeal, the Federal Circuit panel noted that Alice does not “broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two.” (Slip Op. at 11.) This is because “[s]oftware can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route.”  (Id.)  The panel, therefore, found it “relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.”  (Id.)

Approaching the issue in this manner, the Federal Circuit reversed the district court’s finding that the asserted claims were directed to an abstract idea under Alice step one. The panel reached this decision because “the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.” (Slip Op. at 12.) The decision cautions district courts not to over-simplify the claim limitations in determining compliance with § 101 because “describing 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.” (Slip Op. at 14.) Finally, the decision emphasizes that the ability of the patented invention to run on a general purpose computer does not mean that the claims are unpatentable, because the claims themselves were directed to an improvement in the functioning of the computer itself. (Slip Op. at 16.)

In In re TLI, decided just five days later, the Federal Circuit concluded that the claims at issue were unpatentable under § 101. There, the claims were directed to “recording of a digital image, communicating the digital image from the recording device to a storage device, and to administering the digital image in the storage device.” (Slip Op. at 3.) The specification recognized that the prior art taught the ability to record, communicate, and store digital images, but “when a large number of digital images are recorded and are to be archived in a central computer unit, then the organization of the data base becomes a problem.” (Slip Op. at 4.) The patented invention sought to solve this problem by storing “classification information” along with each digital image that enabled the user to more easily retrieve the image later. (Slip Op. at 4-5.)

The Federal Circuit panel found the claims directed to an unpatentable abstract idea because they were “drawn to the concept of classifying an image and storing the image based on its classification,” and “the specification makes clear that the recited physical components merely provide a generic environment in which to carry out the abstract idea of classifying and storing digital images in an organized manner.” (Slip Op. at 7-8.) In other words, the claims were “directed to the use of conventional or generic technology in a nascent but well-known environment, without any claim that the invention reflects an inventive solution to any problem presented by combining the two.” (Slip. Op. at 8.) The panel further noted that the claims did not address: (1) the problem of combining a camera with a cellular telephone; (2) how to transmit images via a cellular network; (3) how to append classification information to the data being transmitted; or (4) any problem related to the structure of the server that stores the organized digital images, suggesting that claims directing to solving problems in these areas may have passed step one of Alice. (Slip Op. at 9.) The decision then went on to address Alice step two and affirm the district court’s determination that the asserted claims failed to recite elements sufficient to transform the abstract idea into a patent eligible application of that idea. (Slip Op. at 9.)

Demonstrating the importance of these decisions to the evolving body of § 101 precedent post-Alice, the USPTO wasted no time in issuing Examiner guidance emphasizing the need to consider at step one (USPTO “step 2A”) whether a claim is directed to an improvement in computer-related technology.

The decisions also demonstrate the importance of focusing on the specific language of the claims and the portions of the specification that can be said to describe a technical innovation, when faced with a motion under § 101. Of note, the asserted claims at issue in EnFish were drafted in means-plus-function format – and, therefore, were construed in view of the corresponding algorithm in the specification – whereas the representative claim in TLI was a method claim that included broad steps for “recording and administering digital images” (though other asserted claims included means-plus-function limitations). Getting the court to understand the technical teachings in the specification and how those teachings relate to what is claimed may be a way to avoid a finding that claims are directed to an abstract idea.