Federal Circuit ruling may affect patent eligibility arguments

[Federal Circuit rulings attached below]

In order to have a chance of overcoming rejections under 35 U.S.C. Section 101 -- the statute that defines the type of subject matter eligible for patent protection -- patent specifications should be drafted to specifically highlight the technological improvement, and how it contrasts with existing conventional technology.

Since the U.S. Supreme Court decision in Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014), patent claims based in software have often found difficulty overcoming the hurdle of subject matter eligibility under Section 101 and the Alice/Mayo test (see Mayo Collaborative Services v. Prometheus Laboratories, 566 U.S. 66 (2012)). Fortunately for patent practitioners, the U.S. Court of Appeals for the Federal Circuit, in precedential cases such as Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir. 2016), and McRo, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016), have helped to clarify application of the Alice/Mayo test, and provided practitioners with a generally-applicable framework for arguing patentability before the U.S. Patent and Trademark Office or the courts.

For example, in Enfish, the Federal Circuit analyzed a claim directed to a self-referential table, and concluded that the claim was "directed to an improvement in existing technology" because the claimed self-referential table functioned differently from conventional database structures and improved database functionality by not requiring "a programmer to preconfigure a structure to which a user must adapt data entry." In McRo, the panel found a claim directed to setting morph weights for animating character speech through the "automatic use of rules of a particular type" to be eligible subject matter, noting that it was "the incorporation of the claimed rules, not the use of the computer, that improved the existing technological process by allowing the automation of further tasks." These rationales were quickly seized upon by patent practitioners in arguing the eligibility for many of their own cases before the Patent Office.

However, as shown the Federal Circuit's Aug. 15 opinion in BSG Tech LLC v. Buyseasons, Inc., 2017-1980, not all improvements in computer and software-based claims will qualify as being to a computer or technological process. BSG's patents were directed to a "self-evolving generic index for organizing information stored in a database" that enabled users to "add new parameters for use in describing items." In order to guide how users would input the new parameters and maintain consistency between different users, the claimed system would provide the user with "listings of previously used parameters and values," as well as summary information associated with the provided parameters and/or values. The Federal Circuit panel agreed with the district court decision that found the claims to be "directed to the abstract idea of considering historical usage information while inputting data" and ineligible under Section 101.

BSG attempted to argue that their claims were analogous to those of Enfish, because they required a specific database structure. However, the panel found that the specific database structure simply provided a generic environment in which to carry out the abstract idea. Even though the claims recited a structure "slightly more detailed than a generic database," such structures were known in the art at the time of invention. This is in contrast with Enfish, which described the structure of the self-referential table in detail, and emphasized how it functioned differently from conventional database structures.

BSG also attempted to single out a particular claim that required the database structure to be one to which users "can add additional parameters without modifying the predefined structure of the database," arguing the claim independently as being further differentiated from generic databases and improving the functionality of the computer. However, as their patent specification did not describe how such a database structure would be constructed, or suggest that conventional databases would require structural modifications to add new parameters, the panel argued that this indicated that the feature was not the focus of the claims. Further, the patent specification did not explain how it would result in improvements to database functionality relative to structures that did not have this feature.

BSG furthered argued that its claims were focused "on a non-abstract improvement in database functionality" by improving "the quality of information added to the database and the organization of information in the database." However, to the extent guiding user inputs would result in a more organized database, such improvements were held to be "not improvements to database functionality" but instead "benefits that flow from performing an abstract idea in conjunction with a well-known database structure" because the information is still "stored and organized in the same manner as information inputted into conventional databases capable of indexing data as classifications, parameters, and values."

Again, this contrasts with Enfish, which focused how the self-referential table functioned differently from conventional database structures. In BSG, any improvements in the organization of the database achieved by guiding users to input parameters that align with historical parameters utilized by other users do not affect the actual underlying functionality of the database. As such, the panel draws a distinction between, in claims pertaining to the processing or storage of data, what the information is versus how the information is handled. While improvements to the latter may often be able to satisfy subject matter eligibility under Section 101, such as in Enfish, improvements to the former, even if useful to users, will face a much tougher battle.

While the BSG decision does not explicitly mention McRo, comparison of the two cases may yield further insights to the types of improvements that would be patentable under Section 101. For example, in McRo, the panel held that the "automatic use of rules of a particular type" to achieve an improvement in computer animation was eligible. While rules by themselves may be abstract and not rooted in computer technology, their use in the claims improved the underlying functionality of the computer (e.g., how the computer operates), from previously being unable to produce character speech animation without human input, to being able to do so. Furthermore, the panel in McRo characterized the claimed rules as being "unconventional," and emphasized that there was "no evidence that the process previously used by animators is the same as the process required by the claims." Again, this provides a contrast with BSG, in which it was unclear what (if any) differences existed between the specific database structures of claims and conventional database structures.

However, while McRo placed a large emphasis on preemption, stating that the "concern underlying the exceptions to § 101 is not tangibility, but preemption," such arguments since have tended to find only limited success, a trend that is continued in BSG. For example, in BSG, the panel held that even if he claims were narrow and did not preempt "consideration of historical usage information while inputting data into other types of databases," the claims were still directed to an abstract idea, and emphasized again that the specific database structures were still "well-understood and conventional." As such, BSG appears to continue the erosion of the effectiveness of preemption for arguing against Section 101 rejections. Instead, it appears that lack of preemption cannot overcome Section 101 by itself, but must instead be accompanied by technical improvement and unconventionality.

Viewing these cases together, the decision in BSG appears to reinforce the notion that, in order to have a chance of overcoming Section 101 rejections, the specification should be drafted to specifically highlight the technological improvement, and how it contrasts with existing conventional technology. Both Enfish and McRo did this, by emphasizing the distinctions between self-referential tables and conventional structures, and the distinctions between automation with rules versus existing manual subjective determinations, respectively. In addition, the improvement should be to the underlying function of the computer or database, and not to the content of data operated on or how useful that content is to the user (how versus what). Furthermore, these cases continue to blur the line between subject matter eligibility and novelty, as the analysis often hinges upon whether the claimed technological features (e.g., database structures, rules, etc.) are new or well known in the prior art, which can mean all the difference as to whether the claims are directed to an improvement to technology or not.