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UPDATE ON SUBJECT MATTER ELIGIBILITY, CLS BANK AND ITS AFTERMATH

UPDATE ON SUBJECT MATTER ELIGIBILITY, CLS BANK AND ITS AFTERMATH. Joseph A. Calvaruso IP Practice In Japan Committee AIPLA 2014 Annual Meeting Washington, D.C. October 21, 2014. Alice Corp. v. CLS Bank Int’l , 134 S. Ct. 2347 (2014). Three types of patent claims at issue :

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UPDATE ON SUBJECT MATTER ELIGIBILITY, CLS BANK AND ITS AFTERMATH

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  1. UPDATE ON SUBJECT MATTER ELIGIBILITY,CLS BANK AND ITS AFTERMATH Joseph A. CalvarusoIP Practice In Japan CommitteeAIPLA 2014 Annual MeetingWashington, D.C. October 21, 2014

  2. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) Three types of patent claims at issue: • Method:No hardware or computer based limitations, but the parties agreed the method claims require a computer including a processor and memory for implementation • Computer Readable Medium:Program code for causing computer to send a transaction and perform specified processing • System: Data processing system; data storage unit; computer configured to receive a transaction electronically, adjust records, and generate instructions

  3. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) The Federal Circuit, 717 F.3d 1269 (Fed. Cir. 2013) (en banc), found all the claims not patentable • “Upon consideration en banc, a majority of the court affirms the district court’s holding that the asserted method and computer-readable media claims are not directed to eligible subject matter under 35 U.S.C. §101.” • “An equally divided court affirms the district court’s holding that the asserted system claims are not directed to eligible subject matter.” • “[N]othing said today beyond our judgment has the weight of precedent.”

  4. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) Question presented: • “Whether claims to computer-implemented inventions – including claims to systems and machines, processes, and items of manufacture – are directed to patent-eligible subject matter within the meaning of 35 U.S.C. §101as interpreted by this Court.”

  5. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) • If the claims are directed to a patent ineligible concept like an abstract idea, the question is: • Do the claim’s elements, considered both individually and as an ordered combination, transform the nature of the claim into a patent eligible application.

  6. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) • Method claims – simply recite the concept of intermediated settlement as performed by a generic computer. • System claims – recite generic computer components configured to implement the abstract idea. • Media claims – add nothing of substance to the abstract idea.

  7. USPTO Guidelines • Determine whether the claim is directed to one of the four statutory categories of invention, i.e. process, machine, manufacture or composition of matter. • Determine whether the claim is directed to a judicial exception (i.e., law of nature, natural phenomenon and abstract idea)

  8. USPTO Guidelines Examples of abstract ideas include: • Fundamental economic practices. • Certain methods of organizing human activities. • An idea itself. • Mathematical relationships formulas.

  9. USPTO Guidelines • If an abstract idea is present in the claim, determine whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the abstract idea itself.

  10. USPTO Guidelines Limitations that may be enough to qualify as “significantly more” include: • Improvements to another technology or technical field. • Improvements to the functioning of the computer itself. • Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment.

  11. USPTO Guidelines Limitations that are notenough to qualify as “significantly more”: • Adding the words “apply it” (or an equivalent) with an abstract idea or mere instructions to implement an abstract idea on a computer. • Requiring no more than a generic computer to perform generic computer functions that are well understood, routine and conventional activities previously known to the industry.

  12. AIPLA Comments To USPTO Guidelines • Alice made no major changes to the framework for determining patent eligibility. • Alice does not require substantive changes to current examination guidance. • Prior guidance remains viable; the two-part Mayo framework is not exclusive, and may not be appropriate for every claim. • Generalizations and overly broad interpretations should be avoided. • Examiners should be instructed to err on the side of finding eligible matter. • The burden rests on the Office to fully support a rejection under section 101 and to take into account evidence submitted by an applicant.

  13. AIPLA Comments To USPTO Guidelines • Abstract ides are those that have always existed or been long prevalent. • Claim as a whole must be considered when evaluating whether it is directed to an abstract idea. • Guidance to examiners should emphasize adherence to the concrete examples of “abstract idea” found in current case law as opposed to any extension of or addition to the narrow pool of ineligible subject matter. • A complete examination is required. • Each claim type should receive a separate analysis for “something more”. • The “something more” requirement must consider a claim as a whole.

  14. Digitech v. Electronics for Imaging, Inc.,758 F.3d 1344 (Fed. Cir. 2014) Device Profile Claims • A device profile for describing properties of a device in a digital image reproduction system . . .comprising: first data for describing a device dependent transformation of color information content of the image. . . second data for describing a device dependent transformation of spatial information content of the image. . .

  15. Digitech v. Electronics for Imaging, Inc.,758 F.3d 1344 (Fed. Cir. 2014) (cont’d) As to the device profile claims: • “The claims’ only description of the device profile is that it comprises ‘first data for describing’ color information and ‘second data for describing’ spatial information.” As to the method claims: • The method in the ‘415 patent claims an abstract idea because it describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine.”

  16. Planet Bingo, LLC v. VKGS LLC, Case No. 2013-1663, 2014 WL 4195188 (Fed. Cir. Aug. 26, 2014) • Managing the game of bingo “consists solely of mental steps which can be carried out by a human using pen and paper.” • The claims are directed to the abstract idea of “solv[ing a] tampering problem and also minimizing other security risks “during bingo ticket purchases.” • The claims recite “a generic computer implementation of the covered abstract idea.”

  17. Buysafe, Inc. v. Google, Inc., Case No. 2013-1575 2014 WL 4337771 (Fed. Cir. Sept. 3, 2014) • The claims involve essentially financial transactions between two entities which in theory could be applied without computers. • The computer functionality in the claims is generic and merely put the abstract idea of guaranteeing a contractual relationship into the environment of the Internet.

  18. U.S. Bancorp v. Retirement Capital Access Management Company (Case CBM 2013-0014) • 35 U.S.C. §101 is a proper ground of review. • “The concept of advancing funds based on future retirement payments is an economic practice long prevalent in our system of commerce and squarely within the realm of abstract ideas.” • The claims amount to nothing significantly more than an instruction to apply the abstract idea of advancing funds based on future retirement payments using an unspecified generic computer.”

  19. District Court Cases Finding Invalidity Under§101 • Comcast IP Holdings v. Sprint Communications Company L.P. et al., C.A. No. 12-cv-205, 2014 WL 3542055 (D.Del. July 16, 2014) – summary judgment of invalidity – claims directed to an abstract idea – generic references to a telephony network and an application are not sufficient. • Dietgoal Innovations LLC v. Bravo Media LLC (Division of NBC Universal Media, LLC, C.A. No. 1:13 cv-08391, 2014 WL 3582914 (S.D.N.Y. July 8, 2014) – summary judgment of invalidity – claims directed to system and method of computerized meal planning is an abstract idea – claims do no more than “simply instruct the practitioner to implement the abstract idea . . . on a generic computer.”

  20. District Court Cases Finding Invalidity Under§101 (cont’d) • CMG Financial Services, Inc. v. Pacific Trust Bank, F.S.B., C.A. No. 11-cv-10344 (C.D. Cal. Aug. 29, 2014) – summary judgment of invalidity – method and system of linking a mortgage line of credit to a checking account – abstract idea with generic computer functions. • Loyalty Conversion Systems Corporation, v. American Airlines, Inc. et al., C.A. No. 2:13-cv-655, 2014 WL 4364848 (E.D. Tex. Sept. 3, 2014) – motion to dismiss on the pleadings granted based on §101 invalidity – merely abstract idea (purely functional) with generic computer implementation.

  21. District Court Cases Finding Invalidity Under§101 (cont’d) • Tuxis Technologies, LLC v. Amazon.com, Inc., C.A. No. 13-cv-1771, 2014 WL 4382446 (D. Del. Sept. 3, 2014) – motion to dismiss for failure to state a claim based on §101 invalidity – abstract idea with conventional computer implementation. • Walker Digital, LLC v. Google, Inc., C.A. No. 11-cv-318, 2014 WL 4365245 (D. Del. Sept. 3, 2014) – summary judgment of invalidity – abstract idea with generic computer implementation.

  22. District Court Cases Finding Invalidity Under§101 (cont’d) • Eclipse IP LLC v. McKinley Equipment Corp., C.A. No. 2:14-cv-00154, 2014 WL 4407592 (C.D. Cal. Sept. 4, 2014) – motion to dismiss based on §101 invalidity – abstract idea with generic computer implementation. • Every Penny Counts, Inc., v. Wells Fargo Bank, N.A., C.A. No. 11-cv-2826, 2014 WL 4540319 (M.D. Fla. Sept. 11, 2014) – summary judgment of invalidity under §101 – abstract idea with well understood, routine, conventional activity. • Open Text S.A. v. Alfresco Software LTD., C.A. No. 13-cv-04843, 2014 WL 4684429 (N.D. Cal. Sept. 19, 2014) – motion to dismiss for invalidity under §101 - claims directed to abstract marketing idea that uses generic computer and the Internet to facilitate customer communications.

  23. Thanks for your attention! Questions? Joseph A. Calvaruso Partner Orrick, Herrington & Sutcliffe LLP 51 West 52nd Street New York, NY 10019 +1-212-506-5140 +1-914-414-5174 jcalvaruso@orrick.com Joseph A. Calvaruso

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