219.1 No “Technological Feature” in Trading Software Leads to both CBM Review and Claim Ineligibility for Trading Technologies International

The United States Court of Appeals for the Federal Circuit recently affirmed a Patent Trial and Appeal Board decision holding stock-trading software patents to be both eligible for CBM review and their claims to be ineligible under 35 U.S.C. § 101. In deciding both issues, the Federal Circuit emphasized “simply display[ing] information that allows a trader to process information more quickly” does not amount to a technological invention for CBM purposes or solve a technological problem to amount more than an abstract idea. See Trading Techs. Int’l, Inc. v. IBG LLC, Nos. 2017-2257, 2017-2621, 2018-1063, 2019 U.S. App. LEXIS 11311 (Fed. Cir. Apr. 18, 2019) (Before Moore, Mayer, and Linn, Circuit Judges) (Opinion for the Court, Moore, Circuit Judge).

Trading Technologies International, Inc., (“TT”) is the owner of three patents relating to graphical user interfaces for electronic trading. Two patents, U.S. Patent Nos. 7,533,056 and 7,212,999 (“the ’056 patent” and “the ’999 patent”), share a specification and recite “a user interface for an electronic trading system that allows a remote trader to view trends in the orders for an item, and provides the trading information in an easy to see and interpret graphical format.” The third patent, U.S. Patent No. 7,904,374 (“the ’374 patent”), recites “a display and trading method to ensure fast and accurate execution of trades by displaying market depth on a vertical or horizontal plane, which fluctuates logically up or down, left or right across the plane as the market prices fluctuate[].”

IBG LLC and Interactive Brokers LLC (“Petitioners”) petitioned for inter partes review of claims of the three patents under Covered Business Method (“CBM”) review. The Patent Trial and Appeal Board (“Board”) held the patents were eligible for CBM review and the challenged claims are ineligible under 35 U.S.C. § 101. TT appealed.

The Court first addressed whether the patents were eligible for CBM review. The AIA only allows the Board to institute CBM review for a CBM patent, which is “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.” AIA § 18(d)(1) (emphasis in decision). TT argued that the patents recited a “technological invention,” and thus were not eligible for CBM review. Its main argument was that “the ’999 patent addressed problems related to speed, efficiency, and usability, and the ’056 patent addressed problems related to intuitiveness, visualization, and efficiency.”

The Court agreed with the Board, finding no technological invention in the trading software. The specification of the ’056 and the ’999 patents were persuasive, as they disclosed “that a successful trader anticipates the market to gain an advantage, but doing so is difficult because it requires assembling data from various sources and processing that data effectively.” The invention sought to overcome these difficulties by “displaying trading information ‘in an easy to see and interpret graphical format.’” To the Court, the “invention makes the trader faster and more efficient, not the computer. This is not a technical solution to a technical problem.” These patents were held eligible for CBM review.

As for the ’374 patent, the Court “saw no meaningful difference between” these claims and those of the ’056 and the ’999 patents. TT argued the GUI in the claims “solves a problem that might cause the trader to submit an order at a price he did not intend,” and are therefore technological inventions. However, the Court agreed with the Board in that the claims do not require a GUI to provide any market information, but instead relate only to axes and mapping graphical locations. The Court, in other words, did not agree that the claims solve the problem TT argued the claims solved. Accordingly, the Court held all patents are related to the “practice of a financial product, not a technological invention,” and are therefore eligible for CBM review.

The Court next addressed whether the claims of the patents were eligible under 35 U.S.C. § 101. By being eligible for CBM review, the inter partes review of the patents could include these eligibility challenges by the Petitioners. The Court analyzed the ’999 patent, the ’056 patent, and the ’374 patent under steps one and two of Alice.

For the ’999 patent, the Board found the claims to be directed to “the abstract idea of graphing (or displaying) bids and offers to assist a trader to make an order” under step one of Alice. The Court agreed, stating, “[W]e have treated collecting information including when limited to particular content (which does not change its character as information), as within the realm of abstract ideas.” Quoting Electric Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016). The elements of “selecting” and “moving” orders were found to be fundamental economic practices. Finally, the court reiterated “[t]he fact that this is a ‘computer-based method’ does not render the claims non-abstract.” Indeed, the specification of the ’999 patent stated any computer could implement the method. Under step two, the ’999 patent fared no better. The Board and Court agreed that gathering and displaying data is a “conventional activity that does not add something more to the abstract idea.”

For the ’056 patent, the Board similarly found the claims to be directed to “graphing (or displaying) bids” under step one. The Court saw “no meaningful difference between these limitations and the similar limitations of claim 1 in the ’999 patent and thus reach the conclusion that it too is directed to an abstract idea.” At step two, TT argued “the claims improve computer functionality by improving on the intuitiveness and efficiency of prior GUI tools.” According to the Court, helping a trader process information more quickly is not an improvement to a computer, and thus does not add significantly more to the abstract idea.

For the ’374 patent, TT presented similar arguments at step one of Alice as it presented in the issue of CBM review. Accordingly, the Court’s reasoning at step one was similar to the reasoning in the issue of CBM review— the Court did not agree that the claims solve the asserted problem, and the claims are directed to an abstract idea. The claims of the ’374 patent fared no better under step two of Alice, as the specification of the patent indicated the invention could be “implemented ‘on any existing or future terminal or device’ and describes the programming as insignificant.” The Court held all three patents to be ineligible under 35 U.S.C. § 101.

The Court summarily dismissed two additional arguments by TT. First, the Court did not review the non-precedential decisions cited by TT. Second, the Court dismissed TT’s challenge to the constitutionality of CBM review. The four sentences challenging CBM review under “the Seventh Amendment, separation of powers under Article III, the Due Process Clause, and the Taking Clause” did not preserve the issue for appeal.

After considering all remaining arguments, the court concluded all patents were eligible for CBM review and the claims were ineligible under 35 U.S.C. § 101.

A graphical user interface that simplifies gathering and processing information may not amount to a “technological invention,” and thus can be eligible for CBM review. Failing to be a “technological invention” in the CBM analysis may cause problems for 35 U.S.C. § 101 claim eligibility at step one of Alice.

219.2 Federal Circuit Majority Affirms Infringement and Failure to Invalidate DuPont’s Patent for Aircraft Fuselage Blanket

The United Stated Court of Appeals for the Federal Circuit recently affirmed a district court’s claim construction and denial of motions for judgment of noninfringement and invalidity as a matter of law after a jury found that Unifrax’s flame barrier product infringed DuPont’s patent and Unifrax failed to prove DuPont’s patent is invalid. See E.I. du Pont de Nemours & Co. v. Unifrax I LLC, No. 2017-2575, 2019 U.S. App. LEXIS 11207, 2019 WL 1646491 (Fed. Cir. April 17, 2019) (Before O’Malley, Reyna, and Hughes, J.) (Opinion for the court, Reyna, J.) (Dissenting opinion, O’Malley, J.). Click Here for a copy of the opinion.

DuPont owns a patent claiming composite laminates that are incorporated into thermal-acoustic blanket installed on the interior of an aircraft fuselage and are used to reduce noise and shield passengers from flames. The claimed laminates include three layers of materials: a polymeric film layer, an inorganic refractory layer, and an adhesive layer between the film and refractory layers. The primary dispute concerns the inorganic refractory layer, which generally consists of “vermiculite platelets” that come from the natural mineral vermiculite. Specifically, claim 1 recites “(iii) an inorganic refractory layer; wherein the inorganic refractory layer of (iii) comprises platelets in an amount of 100% by weight with a dry areal weight of 15 to 50 gsm and a residual moisture content of no greater than 10 percent by weight.”

DuPont sued Unifrax alleging that Unifrax’s Combi-Film 3G11 product (3G11 product) infringed DuPont’s patent. At trial, the parties disagreed on the construction of “100% by weight.” DuPont argued that “100% by weight” means “[t]here is no carrier material such as resin, adhesive, cloth or paper in addition to the inorganic platelets,” although “[t]here may be some residual dispersant arising from incomplete drying of the platelet dispersion.” Unifrax argued that no construction is necessary and the term should be given its plain meaning. The district court summarized the disagreement as being “whether the platelets are 100% of the inorganic refractory layer or 100% relative to carrier material in the inorganic refractory layer,” and ultimately adopted DuPont’s construction in view of the specification and prosecution history.

On appeal, the Federal Circuit began its analysis looking at the claim language itself. The majority found that claim 1’s recitation of “a residual moisture content of up to ‘[10%] by weight’ in addition to ‘100% by weight’ platelets in the refractory layer undercuts Unifrax’s plain meaning argument” because “Unifrax’s position would require that the term ‘100% by weight’ be considered alone, without reference to the surround claim language.” According to the Court, it would be “nonsensical” if the total percentage of components comprising the inorganic refractory layer exceed 100%.

Looking next to the specification, the majority found that specification explains that the refractory layer comprises platelets, such as at least 85%, 90%, or 95% of the layer comprising platelets. “In some embodiments, platelets comprises 100% of the layer. The refractory layer may comprise some residual dispersant.” The majority found that this passage supports the district court’s conclusion that “100% by weight” is relative to carrier material in the refractory layer.

Unifrax also argued that the district court erred in its definition of intrinsic evidence. DuPont’s asserted patent resulted from a continuation-in-part from a parent application that also resulted in a patent. The district court’s decision relied on the parent’s specification as intrinsic evidence, and Unifrax challenged the district court’s characterization of the parent’s specification. The majority, however, agreed with the district court, finding that the parent’s specification is intrinsic evidence in construing claims because the subject matter is common to the continuation-in-part application.” Notably, the parent specification provided:

In one embodiment of this invention, the inorganic platelet layer contains 100% platelets i.e. there is no carrier material such as resin, adhesive, cloth or paper. However, there may be some residual dispersant arising from incomplete drying of the platelet dispersion.

The majority found that “this passage relates to common subject matter and informs the meaning of the ‘100% by weight’ claim term as used in [the asserted] patent by clarifying what is not included in the refractory layer—a carrier material such as resin adhesive, cloth, or paper.” In addition, the majority pointed to the familial relationship of the two applications and the fact that the parent application was cited on the face of the asserted patent.

In view of these commonalities, the majority found that “there is no reason to infer that the patentees intended to change the meaning of the term or that a person of ordinary skill in the art would understand ‘100%’ differently in the context of the [asserted] patent.” Accordingly, “the [parent] specification illuminates the meaning of “100% by weight” to a person of ordinary skill in the art, who would understand that the term is used in the same way in the [asserted] patent, relative to carrier material, and that while the claimed “100% by weight” platelet refractory layer may comprise residual dispersant, “there is no carrier material.”

Turning to the prosecution history, the majority found that DuPont distinguished its claimed invention from a prior art reference by amending claim 1 to recite “a platelet concertation of 100% platelets, not requiring a carrier, while also clarifying that the refractory layer required ‘a defined areal weight and a defined residual moisture content.’” (emphasis in decision). “Thus, the patentees’ amendment does not disclaim embodiments with a refractory layer containing moisture from ‘dispersant arising from incomplete drying of the platelet dispersion,’ i.e., non-carrier materials.” The majority dismissed the dissent’s opinion that “100% by weight” permits residual moisture but not other ingredients such as a dispersant, finding Unifrax’s own argument to oppose the dissent’s conclusion. Further, the dissent’s conclusion was based on the premise that there is no ambiguity in the claim language, whereas Unifrax argued that claim language contains unresolvable ambiguities, again belying the dissent’s findings.

Finding the district court’s claim construction to be correct, the Court evaluated whether the 3G11 product infringes DuPont’s patent, which turns on two questions: (1) whether the 5% polydimethylsiloxane (PDMS) in the 3G11 product functions as an adhesive and (2) whether the silane in the 3G11 product is a carrier material in the refractory layer.” The Court found that “Unifrax’s non-infringement arguments rely on the premises that the DEHESIVE 480 material (which comprises PDMS) used in [the 3G11 product] is a carrier, or alternatively, that silane is both included in the refractory layer and is a carrier.” Thus Unifrax’s arguments result in the Court being tasked to “determine whether substantial evidence supports a jury finding that DEHESIVE 480 is not a carrier and that silane is either not in the refractory layer or is not a carrier.”

Regarding the DEHESIVE 480 material (which includes PDMS), one of Unifrax’s experts testified that a carrier is something that helps the platelets stick together in the refractory layer. Thus, if DEHESIVE 480 does not help platelets stick together, it is not a carrier and falls outside the purview of claim 1 of DuPont’s patent. While silicones like PDMS can serve different functions in different applications and environments depending on how they are formulated, the manufacturer’s product sheet for DEHESIVE 480 refers to it repeatedly as a “release coating,” and one of Unifrax’s experts admitted that the product sheet states that DEHESIVE 480 has anti-adhesive properties.” (emphasis in decision). Further, the product sheet and DuPont’s expert indicated that a “crosslinker” could be added to DEHESIVE 480 to improve adhesion, which could make it then act as a carrier. But because no crosslinker is added to Unifrax’s 3G11 product, the majority found that sufficient evidence supports the jury’s conclusion that DEHESIVE 480 is not a carrier.

As for whether silane is not in the refractory layer of the 3G11 product, the majority found that several pieces of evidence supported the jury’s findings. For example, Unifrax provided several schematics of the 3G11 product that showed silane as a separate layer from the vermiculite layer, and an internal email referred to silane as an “overlayer coating” and “not in the binder.” Further, the majority found that silane would not be a carrier even if it was in the refractory layer. For example, an internal email indicated that silane was “not the binder” in the 3G11 product. Accordingly, the majority found that substantial evidence supports the jury’s conclusion that silane is neither in the refractory layer nor is it a carrier in the 3G11 product. Thus, because the jury’s infringement verdict is supported by legally sufficient evidence, the majority affirmed the district court’s denial of Unifrax’s motion for judgment of noninfringement as a matter of law.

Turning to invalidity, Unifrax argued that a prior art reference anticipates DuPont’s patent, and the dispute turned on whether the reference discloses a silicon material in the refractory layer that is essentially the same as the PDMS in DEHESIVE 480 in the infringing 3G11 product. The reference discloses mica paper as a refractory layer consisting of platelets reinforced by a methyl silicon material such as the “resin Wacker K.” The manufacturer’s product sheet for Wacker K refers to the material as a “methyl silicon resin” and as an ideal “binder” with “high binding strength.” One of Unifrax’s experts opined that the methyl silicon resin of Wacker K and the PDMS in the 3G11 product are the same but also admitted there are different types of silicone that serve different functions and that Wacker K serves as a resin in the prior art reference and is a different chemical than the PDMS-containing DEHESIVE 480 in the 3G11 product. Further, in contrast to the binding qualities listed for Wacker K in its product sheet, the product sheet for DEHESIVE 480 indicates that it is a release agent with anti-adhesive, non-binding properties. Thus, the majority found substantial evidence to support the jury’s finding that the prior art reference does not anticipate the asserted claims of DuPont’s patent.

Unifrax also argued that its 3G7 product—a predecessor to the infringing 3G11 product—anticipates the asserted claims of the DuPont patent. DuPont did not dispute this point but instead argued the inventors conceived the claimed invention and reduced it to practice prior to 3G7’s May 2011 public use date such that priority for DuPont’s invention predates the 3G7 product under pre-AIA law. One of the named inventors testified that he and the other named inventor conceived of a “laminate with this combination of a vermiculite layer, adhesive layer, and polymer film layer” in November or December 2009 while working at DuPont. As corroborating evidence, DuPont offered emails from December 2009 in which the inventors discussed plans for a three-layer composite film including a polymeric film layer, a vermiculite layer, and a new adhesive layer, as well as testing efforts. Further, DuPont provided testimony and evidence showing that DuPont began developing and testing the three-layer laminate shortly thereafter, culminating in a successful burn-through test at a Federal Aviation Administration facility in August 2010. The majority thus found that under the applicable “rule of reason” analysis, sufficient corroborating evidence supports the credibility of the inventor’s testimony and sufficient evidence supports a finding of conception and reduction to practice before the May 2011 public use date of the 3G7 product. Accordingly, the 3G7 product is not anticipatory.

Judge O’Malley dissented, finding that the district court’s opinion “predicated on an erroneous % construction of ‘100% by weight’ that ignores the plain meaning of ‘100%’ and introduces more ambiguity than it resolves.” Judge O’Malley found no ambiguity in the claim language, opining that “[t]he ‘100% by weight’ language, coupled with the requirement that the platelets exist in an “inorganic refractory layer,” clearly contemplates that the platelets—i.e., inorganic material—constitute the entirety of the refractory layer,” and “[t]hat leaves no room for other organic additives.” (emphasis in dissent). Whereas “[t]he majority finds ambiguity in ‘100%’ because the claims allow the refractory layer to comprise ’a residual moisture content of no greater than 10 percent by weight,” Judge O’Malley believes:

[T]his purported ambiguity is easily resolved by viewing “residual moisture” in context. The claims refer to a “dry areal weight of 15 to 50 gsm,” which implies that the “100% by weight” requirement applies when the refractory layer is dry. The “residual moisture” language, by contrast, clarifies that there can be moisture present after the remaining steps of the manufacturing process are carried out.

Judge O’Malley would have construed the claim by its plain meaning such that “the refractory layer initially comprises a 100%-platelet composition and then it also allows the refractory layer to retain up to 10% ‘residual moisture’ after drying. . . . But, critically, the ‘100% by weight’ limitation focuses on the dried source material (i.e., the platelets), not on the residual dispersant.”

Judge O’Malley also would not have relied on the parent application’s specification to justify a meaning other than the plain meaning of the claim term, particularly in view of the parties’ agreement that the passage from the parent does not amount to lexicography. Judge O’Malley further pointed out that the asserted patent is a continuation-in-part, and that the passage relied on by the district court and the majority was not included in the asserted patent, an intentional omission by the patentee. Further, the patent that issued from the parent application does not include a claim analogous to “100% by weight,” implying that the parent and child continuation-in-part were intended to have different scopes, which Judge O’Malley believes undercuts the justification of relying on the parent’s disclosure.

Finally, Judge O’Malley believes that the district court’s construction created confusion at trial by requiring the jury to “determine whether certain non-platelet additives count as ‘carriers’ or ‘dispersants,’ even though neither term is mentioned in the claims.” According to her dissent, this caused the jury to improperly conclude that the accused 3G11 product satisfies the claimed 100%-platelet requirement, which “defies the plain claim language, as well as common sense.” Thus, Judge O’Malley would have vacated the district court’s construction and adopted the term’s plain meaning, and because DuPont did not dispute that Unifrax does not infringe under that construction, she would have reversed the district court’s denial of judgment of noninfringment as a matter of law.

The majority highlighted that “when a parent application includes statements involving ‘common subject matter’ with the terms at issue” in a patent issuing from a child application—even a continuation-in-part—“those statements are relevant to construction of the terms in the child patent.”