In the wake of the Supreme Court’s decision in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Federal Circuit has issued a series of precedential decisions attempting to delineate between patent-eligible and patent-ineligible improvements in computer-related technology. On August 15, 2017, the Federal Circuit issued another important precedential decision on the subject, concluding that U.S. Patent No. 5,953,740, which claims computer memory systems having certain features, is directed to patent eligible subject matter under 35 U.S.C. § 101.
In Visual Memory LLC v. NVIDIA Corporation, the Federal Circuit reversed the United States District Court for the District of Delaware’s ruling granting the defendant’s motion to dismiss for failure to state a claim based on patent eligibility grounds. Nos. 2016-2254, slip op. at 2 (Fed. Cir. August 15, 2017). The district court, applying the two-prong test set forth in Alice, concluded that the ’740 patent is drawn to patent-ineligible subject matter. Id. at 6. In applying the first prong of the Alice test, the district court found “that the claims were directed to the abstract idea of categorical data storage, which humans have practiced for many years.” Id. (internal quotations omitted). Under the second prong, the district court “found no inventive concept because the claimed computer components—a main memory, cache, bus, and processor—were generic and conventional.” Id.
On appeal, the Federal Circuit emphasized the importance of the “first-stage filter” requiring that the Court “articulate with specificity what the claims are directed to” and “ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.” Id. at 7 (citations and quotations omitted). The Court acknowledged the “difficulty inherent in delineating the contours of an abstract idea.” Id. at 9.
Here, claim 1 of the ’740 patent requires “a memory system ‘having one or more programmable operational characteristics, said characteristics being defined through configuration by said computer based on the type of said processor,’ and ‘determin[ing] a type of data stored by said cache.’” Id. The Federal Circuit concluded that the claims are “directed to an improved computer memory system, not to the abstract idea of categorical data storage” and further noted that “[n]one of the claims recite all types and all forms of categorical data storage.” Id. The Court equated the ’740 patent to those at issue in Enfish Corp. v Microsoft LLC, 822 F.3d 1327 (Fed. Cir. 2016) and Thales Visionix Inc. v. United States, 850 F.3d 1343 (Fed. Cir. 2017), highlighting that the “specification discusses the advantages offered by the technological improvement,” i.e., a “new, improved, and more efficient memory system.” Id. at 10, 12.
Given the Court’s conclusion that the claims of the ’740 patent are not directed to an abstract idea, the court did not address step two of the Alice test.
This most recent decision by the Federal Circuit represents another important addition to the Federal Circuit’s patent-eligibility jurisprudence, which is continuing to develop three years after the Supreme Court’s decision in Alice. And it provides another helpful data point for parties and practitioners engaging in the “difficult” task of delineating between an abstract idea and a patent-eligible technological improvement.
Other Notable Decisions – Week Ending August 18, 2017
Georgetown Rail Equipment Company v. Holland L.P., No. 2016-2297 (Fed. Cir. Aug. 1, 2017) (precedential) (unsealed Aug. 16, 2017) : In Georgetown Rail, the Federal Circuit affirmed the United States District Court for the Eastern District of Texas’s claim construction ruling, a jury verdict finding willful infringement and awarding lost profits, and the district court’s additional award of enhanced damages based on the jury’s verdict. With respect to the claim construction ruling regarding a claim term appearing only in the preamble, the Federal Circuit found that a “preamble is not a claim limitation if the claim body defines a structurally complete invention . . . and uses the preamble only to state a purpose or intended use for the invention.” “[P]reamble language merely extolling benefits or features of the claimed inventions does not limit the claim scope without clear reliance on those benefits or features as patentably significant.” With respect to infringement, appellant argued that it could not be a direct infringer because a third party processed the gathered data. The Federal Circuit discarded this argument, finding that “in a situation where a back-end system is used for processing certain data or information, the party collecting the information may still be said to be using the system because, [i]f the user did not make the request, then the back-end processing would not be put into service, demonstrating control of the system.” Finally, the Court affirmed the enhanced damages award based in part on the fact that the “jury heard evidence that [the appellant] was aware of the [patent-in-suit] prior to the current litigation” and “believed that it was infringing the patent.”
Gold Standard Instruments, LLC v. US Endodontics LLC, No. 2016-2597 (Fed. Cir. Aug. 17, 2017) (non-precedential): In Gold Standard Instruments, the Federal Circuit affirmed the Patent Trial and Appeal Board’s finding that all claims of the challenged patent were obvious. Appellant argued that the Board erred because the prior art reference taught away from the claimed invention. The Federal Circuit rejected this argument because a person of ordinary skill in the art can still be “motivated to make . . . modification[s] despite [a] cautioning statement” in the prior art reference.