How Alice has fared in Delaware
Uncertainty over software patents’ eligibility under 35 USC §101 is alive and well—nearly two years after the Alice v CLS Bank decision. Notwithstanding the framework set forth in Alice, district courts continue to grapple with patent eligibility for software patents in view of the US Supreme Court’s ruling.
However, Alice is often treated as an early invalidity tool with quick application. This is particularly true as district courts appear to be more and more receptive to early §101 challenges, particularly under rule 12 of the Federal Rules of Civil Procedure (FRCP).
On February 5, 2016 in Kaavo v Cognizant Tech Solutions Corp, the US District Court for the District of Delaware found patent claims directed to managing a cloud computing environment invalid for reciting patent-ineligible abstract subject matter.
The patent-in-suit, US number 8,271,974, is titled “Cloud computing lifecycle management for N-tier applications” and discloses an N-tier cloud computing environment. Each tier has a specific function as part of a larger cloud computing network and includes several servers that may be physically and/or wirelessly connected to each other such that one or more servers may be in geographically diverse data centres. Independent claim 1 of the ‘974 patent recites “a method for managing a cloud computing environment for use by a software application”.
Applying Alice
Applying the familiar Alice two-part test, the court first sought to ascertain “the basic character of the subject matter of the patent”. Looking at both the claims and specification, the court found that the ‘974 patent was directed to “setting up and managing a cloud computing environment”.
The court explained that there was no ambiguity over “what the patent [was] all about”, as the specification repeatedly referred to the claimed invention as “relating to management of a cloud computing environment”. The court used the words of the patent—its “phraseology”—against itself to ascertain its “basic character”.
The plaintiff, however, argued that the claimed inventions are not directed to “a longstanding commercial practice” because they relate to a recently emerged technological innovation. Rejecting that contention, the court explained that no court has concluded that a claim cannot be directed to an abstract idea “if the claim relates to a field that is of somewhat recent vintage”.
Applying step two of the Alice framework, the court analysed whether the claims contain an inventive step—something beyond the abstract idea itself. Looking at the claim itself and the specification, the court determined they were devoid of any meaningful restrictions or limitations on how to accomplish the claimed invention. “The claim simply appears to ‘describe’ the [sought-after] effect or result of the steps” with no “meaningful, particularised technological or procedural limitations,” it wrote.
Likewise, the court found the specification only reiterated that there were no particularised limitations required to achieve the claimed inventions. Indeed, the court determined that the specification underscored that no specialised hardware or software was necessary. Additionally, the plaintiff’s arguments to the contrary failed. Despite the court’s repeat invitation, the plaintiff could not identify or articulate any particularised hardware or software components required. Instead, it recognised that the claim limitations and statements on which the plaintiff relied were merely “generic computing technology” or were unsupported conclusory statements. As a result, the court found that the claims lacked an inventive concept.
Motivation Innovations
A little more than a month before Kaavo, the Delaware court found another software patent invalid under Alice, this time in Motivation Innovations v Petsmart. Specifically, the court found claims directed to applying discounts to purchases in order to track customer purchasing habits based on computer-readable discount coupons had recited patent-ineligible subject matter under §101.
Notably, before applying the Alice framework, the court voiced pointed opinions about its application. The court expressed its confusion surrounding the current state of the law and stated that in reviewing post-Alice cases, “the court is struck by the evolution of the §101 jurisprudence, from the complete rejection of patentability for computer programs to the almost complete acceptance of such, to the current (apparent) requirements that the patent claims in suit (1) disclose a problem ‘necessarily rooted in computer technology’, and (2) claim a solution that (a) not only departs from the ‘routine and conventional’ use of the technology, but (b) is sufficiently specific so as to negate the risk of pre-emption”.
“Applying step two of the Alice framework, the court analysed whether the claims contain an inventive step—something beyond the abstract idea itself.”
The court noted that even though most of the patent claims now being challenged under §101 would have survived such challenges if mounted at the time of issuance, these claims are now in jeopardy under the heightened specificity required by the US Court of Appeals for the Federal Circuit post-Alice.
The court continued by emphasising that the §101 analysis is no easy task:
“Given the evolving state of the law, the §101 analysis should be, and is, a difficult exercise. At their broadest, the various decisions of the federal circuit would likely ring the death knell for patent protection of computer-implemented inventions, a result not clearly mandated (at least not yet). On the other hand, to recognise and articulate the requisite degree of specificity—either in the equipment used or the steps claimed—that transforms an abstract idea into patent-eligible subject matter is a challenging task.”
I believe a large number of practitioners echo the sentiments of the district court.
Applying the analytical framework of Alice, the court first determined that the claims at issue are directed to an abstract idea—using coupons to provide discounts. The patent-in-suit, US number 5,612,527, discloses methods for redeeming discount offers by associating a machine-readable identification code, such as a barcode, with data identifying items to be offered at a discount.
At their core, the court determined, the claims were simply directed to the “use and redemption” of coupons: the abstract idea of using coupons to provide discounts. Including additional limitations to how the method was used did not change the “basic character” of the claims.
Turning to step two of the Alice framework, the court was not convinced that the claims contained an “inventive concept”. Rather, the court determined that the claims do nothing more than recite conventional or routine activity or computer technology. The court did not have to stretch to reach its conclusion; the specification told the story.
The ’527 specification describes that a point of sale (POS) machine uses the indicia on the flyers “to identify items which are offered at a discount and then apply an appropriate credit to the purchased items”. The specification further explains that the POS is a “standard readily available machine” linked to a standard computer and fails to disclose any special programming. The court emphasised the need for the invention to be necessarily rooted in computer technology in order to survive the §101 challenge.
But the court, following its understanding of the application of §101 law, stated that the inventive concept of using a machine readable identification code to take discount offers and track customer purchasing habits is not an internet (or computer) centric problem.
Whether claims will be considered as satisfying 35 USC §101 has become unpredictable at best. District courts, however, have made strides in their attempts to provide signposts of what claim types will not pass muster under Alice. For example, as the Delaware district court found in both Kaavo and Motivation Innovations, software patents devoid of any “particularised” technological limitations will not survive under Alice.
Describing elements recited in the claims as “standard” or “well-known” is a red warning flag. This will surely lead to courts finding those items to be routine and conventional computer technology. Because the computer elements in such claimed inventions typically cover generic computer functionality, they probably don’t stand a chance under Alice—as we saw with both these decisions.
So the question remains: should we expect Alice to stay the course? While some practitioners are predicting that Alice’s reign may be coming to a slow halt soon in light of several cases before the federal circuit, it does not seem to be letting up any time soon.
Ferlillia Roberson is of counsel at DLA Piper. She can be contacted at: ferlillia.roberson@dlapiper.com
