For the third time in as many post-grant reviews decided by the Patent Trial and Appeal Board (PTAB), the PTAB has declared a patent to be invalid based on the legal framework established in the 2014 Supreme Court decision in Alice Corporation Pty Ltd v CLS Bank International.

US Patent 8,756,166 is owned by Boxbee, Inc for a computerised method of tracking the location and storage of containers and items as part of a bailment arrangement. Netsirv, LLC challenged the validity of the patent in a request for post-grant review, asserting that the patent claims were invalid as merely an abstract idea, and thus were not patentable subject matter under Section 101 of the Patent Act. In its decision, the PTAB stressed the need to distinguish patents that claim laws of nature, natural phenomena and abstract ideas from those patents that claim patent-eligible applications of those concepts.

Citing prior rulings by the Supreme Court, the PTAB stated that the first step in the analysis is to determine whether the claims at issue are directed to patent-ineligible concepts. If they are, the second step is to consider whether there are additional claim elements that "transform the nature of the claim" into a patent-eligible application.

Netsirv argued that claim 1 of the patent effectively pre-empted the entire containerised storage business that has existed for decades, and the claimed method was merely pre-computer practices being performed by a computer. Boxbee countered by stating that the claims recite a "process previously unknown" as evidenced by a lack of prior art that anticipates the invention. However, the PTAB rejected Boxbee's position, noting that the absence of anticipatory prior art under Section 102 does not affect a determination of patentable subject matter under Section 101. Finding that bailment schemes were a long-prevalent economic practice, the PTAB further concluded that the claims of the patent covered only a computer-as-a-tool for an abstract idea.

The PTAB then assessed whether three specific claim elements were effective in transforming the claims into a patent-eligible concept:

  • performance by a computer and communication of data to a remote device;
  • the nature of the data being communicated; and
  • the step of facilitating delivery of more boxes than requested.

However, none of those claim elements were deemed to recite significantly more than the abstract idea because they were all regarded as incidental to tracking container assignment.

This decision, in addition to the prior two PTAB decisions under the post-grant review process, demonstrates the continuing impact of Alice on the validity of patent claims to inventions which are embodied primarily in software. Unless the claims contain specific elements which are tied to structure or function to transform the invention beyond the mere performance of conventional computer equipment or data, the likelihood of such claims being rejected during prosecution or invalidated in post-grant review remains high.

Warner Joseph Delaune

This article first appeared in IAM. For further information please visit www.iam-media.com.