In September of this year, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a notable decision regarding patentable subject matter. The decision, in McRO Inc. v. Bandai Namco Games America (McRO), signals a possible shift in the way courts evaluate the types of inventions that can be patented. New developments appear to reinforce this view and suggest that both the courts and the U.S. Patent & Trademark Office (USPTO) will increasingly think twice before determining that inventions are unpatentable “abstract ideas.”
The U.S. Supreme Court’s decision in Alice Corp. v. CLS Bank International (134 S.Ct. 2347) continues to set the standard for patent eligible subject matter with its infamous two-part test. The Alice test first examines whether a patent claim contains an exception from patentability and, if the answer is affirmative, asks whether there are additional elements in the claim that amount to “significantly more.” One well known exception is where the claims are directed to an “abstract idea,” although the Court famously declined to provide a definition.
McRO attempted to provide a partial definition, noting that “courts ‘must be careful to avoid oversimplifying the claims’ and that it is important to look at the claims as a whole and without ignoring individual elements. In particular, the CAFC asked whether the patent claims at issue would pre-empt all methods of carrying out the alleged abstract idea (in that case, animating computer-generated characters), or rather simply a “genus” of approaches that can be employed using a particular technology.
As our previous article noted, the concept of pre-emption was mentioned as a motivating factor in the Supreme Court’s Alice decision, but lower courts generally had been reluctant to conclude their analysis in this manner, at the first step of the Alice test. Since McRO, there have been more decisions that based a finding of patentability on a lack of pre-emption, along with some that found a lack of pre-emption insufficient – on its own – to impart patent eligibility. This has prompted the USPTO to issue a Memo to its Patent Examining Corps.
The Memo stops short of instructing patent examiners to consider pre-emption as a primary factor in their analyses. But examiners are instructed to consider some of the points raised in the McRO decision that weigh in favour of finding patentable subject matter: a teaching in the specification about how the claimed invention improves a computer or other technology; a particular solution to a problem or a particular way to achieve a desired outcome defined by the claimed invention, as opposed to merely claiming the idea of a solution or outcome; and whether the claim elements, even if individually known, are arranged in some non-conventional way. These were some of the key takeaways for patent applicants from the McRO decision.
Prospective patentees – particularly those working in areas like FinTech with its emphasis on software-based inventions – have reason to be buoyed by these developments. Patent specifications should continue to be carefully prepared with these developments in mind and explain how a patentee’s invention improves technology and thereby supports a finding in favour of patentable subject matter. This approach is a wise one to follow in the U.S., Canada and elsewhere.