ALICE MAY VISIT THE JURY

The twin Supreme Court holdings in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014) and Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012) establish a two-step test for patent subject matter eligibility under 35 U.S.C. § 101.  These steps are also incorporated in the U.S. Patent and Trademark Office (“USPTO”) Manual of Patent Examination Procedure (“MPEP), § 2106.  Recent Federal Circuit cases have made clear that there may be underlying issues of fact (precluding summary judgment and requiring a trial) in implementing the second step of the Alice/Mayo test, causing the USPTO to change its guidance to patent examiners.

The Alice/Mayo Two Step

Step 1 of the Mayo/Alice test is to assess whether the claim in question is directed to a patent-ineligible concept (laws of nature, natural phenomena, or abstract ideas). See Mayo, 132 S. Ct. at 1296-97; Alice, 134 S. Ct. at 2354-55.  If not, then the usual tests for patentability are applied (essentially that the invention is new and useful). 

However, if the claim is directed to a patent-ineligible concept, then the analysis proceeds to Step 2, which requires that the court consider whether the additional claim elements both individually and as an ordered combination “transform the nature of the claim” into one that is patent-eligible. Alice, 134 S. Ct. at 2355, quoting Mayo, 132 S. Ct. at 1289.  The second step is satisfied when the claim limitations “involve more than performance of ‘well-understood, routine, [and] conventional activities previously known to the industry’”. Alice, 134 S. Ct. at 2359.

Fact or Law

Neither Alice nor Mayo addresses whether the issue of additional claim limitations involving well-understood, routine, conventional activity is one of fact or law. Moreover, the USPTO advised its examiners that “courts have not required evidence to support a finding that additional elements were well-understood, routine or conventional activities, but instead have treated the issue as a matter appropriate for judicial notice,” and indeed, the agency even advised against performing a “prior art search.”  MPEP § 2106.05(d)(1) (prior to April 19, 2018 amended guidance).

All this changed in the wake of the Federal Circuit’s decision in Berkheimer v. HP Inc., 881 F.3d 1360 (2018).  Berkheimer involved the patentability of an invention relating to digitally processing and archiving files in a digital asset management system. 881 F.3d at 1362. The patent specification explains that the system eliminates redundant storage of common text and graphical elements, which improves system operational efficiency and reduces storage costs. Id.  Steven Berkheimer, the patent holder, sued HP, Inc. in the U.S. District Court for the Northern District of Illinois alleging patent infringement. Id., at 1363. The district court granted HP’s motion for summary judgement holding that certain claims were patent ineligible under 35 U.S.C. § 101 and Mr. Berkheimer appealed to the Federal Circuit. Id.

The Federal Circuit ruled that the claims of the Berkheimer patent were directed to abstract ideas. 881 F.3d at 1366-67.  However, it found that whether patent claim elements or combination of elements are well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact, not law. Id., at 1638. On this basis, the Federal Circuit held that (i) the district court erred in concluding that there are no underlying factual questions to the patentability inquiry and (ii) summary judgment was improper. Id., at 1639. The court further ruled that whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. Id. Specifically, the court ruled that in light of the patent specification there was a genuine issue of material fact whether claims 4-7 of the Berkheimer patent perform well-understood, routine, and conventional activities. Id., at 1370.

The USPTO’s Change in Guidance

In a memorandum dated April 19, 2018, the USPTO announced changes in examination procedure pertaining to patent subject matter eligibility in light of Berkheimer and other Federal Circuit cases.[1]  Specifically, the memorandum advised that at the second step of the Alice test, an additional element (or combination of elements) is not “well-understood, routine or conventional” unless the examiner finds, and expressly supports a rejection in writing with one of more of the following demonstrating the well-understood, routine, conventional nature of the additional element(s);:

·         A citation to an express statement in the patent specification or to a statement made by the applicant during prosecution

·         A citation to one or more of the court decisions discussed in MPEP § 2106.05(d)(II);

·         A citation to a publication;

·         A statement that the examiner is taking official notice.

The guidance also advises that upon challenge by the applicant, the examiner should reevaluate his/her position, and if the examiner is taking official notice, provide one or more of the other above referenced supporting demonstrations.

Likely Outcomes

Although it is too early to tell, likely outcomes are that as to patentability issues, there will be fewer rejections at the USPTO and fewer grants of summary judgment in the courts.

Attorneys at Toikka Law Group, LLP would be pleased to consult with you on issues related to patentability in view of the new case law and USPTO guidance.

© 2018 Richard S. Toikka.  All rights reserved.


[1] The other cases are Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018) (reversing judgment on the pleadings) and Exergen Corp. v. Kaz USA, Inc., Nos. 2016-2315, 2016-2341, 2018 WL 1193529, at *1 (Fed. Cir. Mar. 8, 2018) (non-precedential) (affirming denial of a motion for judgment as a matter of law).