Since the Supreme Court’s holding in Alice Corp. v. CLS Bank on June 19, 2014,1 the Federal Circuit has issued four opinions relying on the two-step framework of Alice. These cases include Planet Bingo, LLC v. VKGS LLC,buySAFE, Inc. v. Google, Inc.Digitech Image Technologies, LLC v. Electronics for Imaging, Inc.I/P Engine, Inc. v. AOL, Inc., and most recently Ultramercial, Inc. v. Hulu, LLC. Each opinion provides useful guidance and insight into howAlice may apply to an invalidity challenge under Section 101.

Digitech Image Technologies, LLC v. Electronics for Imaging, Inc.

Digitech was the first case where the Federal Circuit invalidated a patent, relying on the Supreme Court’s precedent. In Digitech, the patent related to digital image processing, which involved electronically capturing an image of a scene with a “source device” (i.e. camera), altering the image, and transferring the altered image to an “output device” (i.e., printer).2 The patent claimed a “device profile,” which described the spatial properties and color properties of both the source device and the output device to enable a more accurate translation of the image’s pixel data across the source and output devices.3 The patent also claimed a method for creating an improved device profile. The Federal Circuit found that both the device profile claims and the method claims were invalid under Section 101.4

The Federal Circuit explained the claimed device profile as no more than “a collection of information,” specifically “one set of data for color information and the other set of data for spatial information.”5 Because the claims were “not directed to any tangible embodiment of this information” and were “instead directed to information in its non-tangible form,” they did “not fall within any of the categories of eligible subject matter under section 101.”6 The Federal Circuit explained that the method claims recited “a process of taking two data sets and combining them into a single data set, the device profile.”7 In finding the method claims were not patent eligible under Section 101, the Court explained that the claims were “an ineligible abstract process of gathering and combining data that does not require input from a physical device.”8 Further, the Court rejected the patentee’s argument that the language “digital image reproduction system” tied the method to an image processor, reasoning that the language was not limiting because it appeared only in the preamble.9 Although the Court did not decide whether tying the method to an image processor would make the claims patent eligible,10 the Federal Circuit’s focus on the physical aspects of the claims shows that it may be beneficial in either defending the validity of a claim or arguing invalidity under Section 101 to focus on language (or lack thereof) that ties the claims to specific machines or structures.11

Planet Bingo, LLC v. VKGS LLC

In Planet Bingo, the Federal Circuit affirmed the district court’s holding that the patents were invalid under Section 101.12 The claims were directed to: “storing a player’s preferred sets of bingo numbers; retrieving one such set upon demand, and playing that set; while simultaneously tracking the player’s sets, tracking player payments, and verifying winning numbers.”13 Importantly, the Federal Circuit cited to part of the district court opinion using the “pen and paper” test: “The district court correctly concluded that managing the game of bingo ‘consists solely of metal steps which can be carried out by a human using pen and paper.’”14 The Federal Circuit explained “not only can these steps be ‘carried out in existing computers long in use,’ but they also can be ‘done mentally.’”15 Although the opinion still relied on the two-step test from the Aliceopinion, the “pen and paper” or “done mentally” test may indicate a broadening of the test for determining whether claims are patent eligible. At the very least, it may allow litigants to cite to the Planet Bingo opinion and utilize this test in making arguments that the claims fall within or outside Section 101.

buySAFE, Inc. v. Google, Inc.

In buySAFE, the Federal Circuit affirmed a decision from the District of Delaware that the claims at issue were directed to an abstract idea, and thus invalid under Section 101.16 The claims involved a transaction guaranty that binds to an online commercial transaction when the transaction closes.17 The Court found that the claims were directed to an abstract idea, specifically “creating a contractual relationship—a ‘transaction performance guaranty’—that is beyond question of ancient lineage.”18 After finding that the claims were directed to an abstract idea, the Federal Circuit proceeded to step two of Aliceand found that “the claim’s invocation of computers adds no inventive concept” because the “computer functionality is generic.”19 Overall, the Federal Circuit noted the simplicity in deciding this case under Alice.20

I/P Engine, Inc. v. AOL Inc.

The patent at issue in the I/P Engine case related to a method for filtering Internet search results using both content-based and collaborative filtering.21 In a per curiam opinion, the Federal Circuit held that the patents were invalid for obviousness and did not discuss or mention Section 101.22 Judge Mayer, however, filed a concurring opinion agreeing that the patents were invalid, but reasoning that the claims were invalid under Section 101, rather than 103.23

Judge Mayer’s concurring opinion, although non-precedential, provides guidance as to what claim limitations may qualify as “significantly more” to find that a claim directed to an abstract idea still may be patent eligible under the second step of the Alice framework. Judge Mayer characterizes the Supreme Court’s opinion in Alice as reciting a “technological arts” test for patent eligibility, which requires a “significant advance in science or technology.”24 Judge Mayer goes one step further by explaining that Section 101 requires not only that claims disclose an advance, but that “this advance be both significant and well defined.”25 Judge Mayer also emphasized the importance of the bargaining idea in the patent system: “[T]he technological arts test recognizes that there has to be some rough correlation between ‘the give and the get’—applicants who make little, if any, substantive contribution to the existing body of scientific and technological knowledge should not be afforded broad monopoly rights that potentially stifle future research and development.”26 This discussion suggests that applicable policy arguments under Section 101 may strengthen the overall invalidity argument.

In his opinion, Judge Mayer utilized the “technological arts” test to find that the claims were “merely an Internet iteration of the basic concept of combining content and collaborative data, relying for implementation on ‘a generic computer to perform generic computer functions.’”27 Because these claims failed the technological arts test, Judge Mayer found that the claims fell outside Section 101 and thus were not patent eligible.28 While this not a precedential opinion, it provides guidance on how to argue that a claim directed to an abstract idea includes (or does not) “significantly more” as required by Alice.

Ultramercial, Inc. v. Hulu, LLC

Ultramercial’s patent-in-suit claimed a method for distributing copyrighted products over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertisement.29 On remand after Alice and in its third consideration of this patent, the Federal Circuit held that Ultramercial’s patent was invalid under Section 101.30 Specifically, it found in step one of Alice that the claims were “directed to an abstract idea . . . a method of using advertising as an exchange or currency.”31 Further, in the second step of Alice, the Federal Circuit found that the claims did not transform the abstract idea into patent-eligible subject matter “because the claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity.”32The Federal Circuit, citing to the machine-or-transformation test, explained that the claims are tied only to a general purpose computer, which provides a “further reason” why the claims did not contain “anything more than conventional steps relating to using advertising as currency.”33

This marks the Federal Circuit’s first reversal of itself under Section 101 using the Alice framework. The Federal Circuit had twice before ruled Ultramercial’s patent was non-abstract, explaining in the first decision that the claims “clearly require[s] specific application to the Internet and a cyber-market environment,”34and in the second decision, that the patent involved “intricate and complex computer programming” and that the “ten specific steps in the claim limit an abstract concept.”35 This reversal indicates that the Alice framework has expanded the applicability of Section 101 to invalidate claims for being directed to an “abstract idea.”

Conclusion

Although neither the Supreme Court nor the Federal Circuit has defined what constitutes an “abstract idea,” each of these five recent decisions by the Federal Circuit provides guidance on how to argue for or against patent eligibility based on Section 101. It will take time for the Federal Circuit to more fully delineate the ramifications of Alice on the patent system as a whole, however, parties subject to a patent infringement lawsuit should be prepared to address claims of invalidity under Section 101 and should analyze the viability of the patent under the new Alice two-step test.