More than two years have passed since the United States Supreme Court issued its landmark decision, Alice Corporation Pty. Ltd. v. CLS Bank International, on the patent-eligibility of abstract ideas under 35 U.S.C. § 101. For almost one and a half years, DDR Holdings, LLC v. Hotels.com, L.P., represented the primary Federal Circuit decision finding claims patent-eligible under the Alice standard. In 2016, the Federal Circuit issued several key decisions reversing the invalidation of patents under § 101, thereby shedding additional light on what types of claims might survive a challenge to patentable subject matter.
First, in Enfish v. Microsoft Corporation, the Federal Circuit determined that claims “related to a ‘self-referential database’” were directed toward patent-eligible subject matter. 822 F.3d 1327, 1329, 1336 (Fed. Cir. 2016). The court distinguished the patent-eligible asserted claims, “directed to a specific improvement to computer functionality,” from patent-ineligible claims that “can readily be understood as simply adding conventional computer components to well-known business practices.” Id. at 1338. Observing that not all “improvements in computer-related technology are inherently abstract,” the Federal Circuit explained that courts could consider “whether the claims are directed to an improvement to computer functionality” as part of the first step of the Alice analysis. Id. at 1335. Because the claimed self-referential table “is a specific type of data structure designed to improve the way a computer stores and retrieves data,” the claims were not directed to an abstract idea under the first step of Alice. Id. at 1339.
Several months later, the Federal Circuit determined that claims “relate[d] to automating part of a preexisting 3-D animation method” were patent-eligible. McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1303 (Fed. Cir. 2016). Citing Enfish, the court framed the inquiry as “whether the claims in these patents focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.” Id. at 1314. In McRO, the claims were “limited to rules with specific characteristics.” Id. at 1313. Because it was the claimed rules, rather than the use of the computer, that “improved the existing technological process,” the claims were not directed toward an abstract idea. Id. at 1314 (internal quotations omitted).
Shortly thereafter, the Federal Circuit reversed another district court’s invalidation of claims under § 101. In Amdocs, the claims were directed toward “parts of a system designed to solve an accounting and billing problem faced by network service providers.” Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1291 (Fed. Cir. 2016). Assuming for the purpose of the analysis that the patents were directed toward an abstract idea under the first step of Alice, the court proceeded to analyze the patent-eligibility of each of the claims under step two. Id. at 1300, 1303, 1304, 1305.
In Amdocs, the court analyzed claims across four different patents, and determined they were each directed toward a “technological solution” to a “technological problem.” Id. at 1300, 1303, 1306; see also id. at 1304 (finding the claims “produced the advantage over the prior art by solving the technological problem at stake.”). For example, one patent was directed toward “enhancing data in a distributed fashion” to solve the technological problem of “massive record flows which previously required massive databases.” Id. at 1300. The court focused on the “enhancing data in a distributed fashion” limitation, considered it a “critical advancement over the prior art,” and determined that even if the claimed solution “requires arguably generic components,” the enhancing limitation “necessarily requires that these generic components operate in an unconventional manner to achieve an improvement in computer functionality.” Id. at 1300–01. The claimed “distributed architecture” of the system provided a sufficiently inventive concept to render the challenged claims patent-eligible under step two of Alice. Id. at 1302, 1303, 1304, 1305.
Overall, the development of the Federal Circuit’s § 101 jurisprudence in 2016 confirmed and elaborated upon the foundation put in place by DDR Holdings. In describing patent-eligible claims as “specific improvement[s] to computer functionality,” or “technological solutions” to “technological problems,” the Federal Circuit echoed its rationale from DDR Holdings: that a “claimed solution . . . necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks” passed § 101 muster. See DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014). As abstract-idea challenges continue to emerge, litigants and patent applicants can move forward into 2017 with these additional guideposts to ascertain what constitutes patentable subject matter.