The Supreme Court’s precedent requires a two-part test to determine whether otherwise patent-eligible claims – directed to a process, machine, manufacture, or composition of matter – are patent eligible in the view of the judicially created exceptions to section 101 eligibility. In part one, the Court determines whether the claims are directed to a patent-ineligible concept, e.g., an abstract idea. If so, in part two of the test, the Court will determine whether the claims include additional elements that transform the nature of the claim into a patent-eligible application.

Courts have in many instances viewed claims in software patents as embodying abstract ideas, thus requiring analysis under part two of the test in order to maintain patent eligibility. However, the Federal Circuit recently issued a decision in Enfish, LLC v. Microsoft Corp., reaffirming the general patentability of software and holding that the claims at issue, which are directed to software, do not qualify as an abstract idea under part one of the test. Importantly, the Federal Circuit indicated that software claims are not inherently abstract and, therefore, do not always have to be considered under part two of the test for patent eligibility.

Enfish sued Microsoft for infringement of several patents related to a “self-referential” database. The patents disclose a logical model for a computer database that explains how various elements of information are related to one another, such that all data entities in the database may be stored in a single table. The claims generally describe a four-step software algorithm for organizing the data in the single table.

The District Court granted summary judgment in favor of Microsoft, finding the claims of the patents at issue to be directed to a patent-ineligible, abstract idea. Specifically, the District Court determined that the claims were directed to the abstract idea of “storing, organizing, and retrieving memory in a logical table” or, more simply, “the concept of organizing information using tabular formats.” The District Court further found that the claims do not include any additional, sufficient elements to transform the claims into patent-eligible subject matter.

The Federal Circuit reversed the District Court’s summary judgment ruling on invalidity under section 101, holding that the claims are patent eligible. The Federal Circuit noted that the District Court’s description of the claims, which the Court characterized as being at a high-level of abstraction and untethered to the language of the claims, would all but ensure that the exceptions to section 101 would swallow the rule.

Pursuant to the first part of the eligibility analysis, the Federal Circuit instead found that the plain focus of the claims at issue was an improvement to computer functionality, not economic or other tasks for which a computer is used in its ordinary capacity. The Court found that the claims were directed to a specific manner of storing data that improves the functionality of the computing device. The Federal Circuit relied heavily on the specification description of the invention’s benefits, which indicated that the disclosed, “self-referential” database functions differ from and provide benefits over the conventional databases known in the art.

The Federal Circuit found that the claims could not be deemed patent ineligible simply because the technology embodied in the claims could be run on a general computer or because the claims did not include any physical components. The Court noted that such approaches would improperly risk creating a categorical ban on software or resurrecting the machine-or-transformation test.

This case provides a marker with respect to whether software claims will be viewed as embodying abstract ideas. Further, this case provides additional ammunition for overcoming patent eligibility issues without having to demonstrate that the claims include additional elements beyond an abstract idea. Finally, the decision highlights the importance of drafting software patent applications to fully discuss the specific improvement in computer technology provided with respect to the prior art.