On August 15, 2017, the Federal Circuit, in a 2-1 decision in Visual Memory LLC v. NVIDIA Corporation, Appeal No. 16-2254, reversed a district court’s determination that Visual Memory’s U.S. Patent No. 5,953,740 was invalid because it was directed to a patent-ineligible abstract idea. The Federal Circuit majority instead concluded that the ’740 patent was directed to a patent-eligible “improvement to computer functionality.”

The ’740 patent describes a computer memory system having “programmable operational characteristics” that are defined based on the type of processor connected to the system, and separate caches that can be programmed to store different types of data based on those characteristics. According to the ’740 patent, by separating the functionality for the caches and defining those functions based on the type of processor, the patented system allows different types of processors to be installed on the same system and can “achieve or exceed the performance of a system utilizing a cache many times larger than the cumulative size of the subject caches.”

Claim 1 of the ’740 patent recites:

A computer memory system connectable to a processor and having one or more programmable operational characteristics, said characteristics being defined through configuration by said computer based on the type of said processor, wherein said system is connectable to said processor by a bus, said system comprising:

a main memory connected to said bus; and

a cache connected to said bus;

wherein a programmable operational characteristic of said system determines a type of data stored by said cache.

In 2015, Visual Memory sued NVIDIA in the District Court of Delaware for infringing the ’740 patent. NVIDIA moved to dismiss the suit under Fed. R. Civ. P. 12(b)(6), asserting that the ’740 patent was invalid because it was directed to a patent-ineligible abstract idea. The district court granted the motion, holding that the ’740 claims were directed to the “abstract idea of categorical data storage.” Visual Memory appealed.

The Federal Circuit majority reversed. In a decision authored by Judge Stoll and joined by Judge O’Malley, the majority first explained that the Supreme Court, in Alice Corp. Pty. V. CLS Bank Int’l, 134 S.Ct. 2347 (2014), established a two-step test for determining whether a patent claim is directed to patent-eligible subject matter under 35 U.S.C. § 101: (i) determine whether the claim is directed to a patent-ineligible concept, i.e., a law of nature, natural phenomenon or abstract idea; (ii) if so, analyze whether the claim elements contain an “inventive concept” that transforms the nature of the claim into a patent-eligible application.

Turning to step one, the majority held that the ’740 claims were directed to a patent-eligible concept. The majority explained that step one requires that a court articulate with specificity what the claims are directed to, and ask “whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.” The majority noted that in two recent decisions—Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) and Thales Visionix Inc. v. United States, 850 F.3d 1343 (Fed. Cir. 2017)—the Federal Circuit held that claims directed to, respectively, a self-referential table for a computer database and a motion-tracking system constituted patent-eligible improvements.

The majority then determined, “with [those] guideposts in mind,” that the ’740 claims “are directed to an improved computer memory system, not to the abstract idea of categorical data storage.” The majority noted that none of the claims “recite all types and all forms of categorical data storage,” and that the ’740 patent moreover explains the “multiple benefits” of the claimed system, including obviating the “need to design a separate memory system for each type of processor” and outperforming a prior art system having “a cache many times larger than the cumulative size of the subject caches.”

The majority distinguished Content Extraction & Transmission LLC v. Wells Fargo Bank, 776 F.3d 1343 (Fed. Cir. 2014), in which the Federal Circuit held patent-ineligible claims to “a method of using a computer and a scanner to extract data from hard copy documents, recognizing specific information in the extracted data, and storing that information in memory,” as well as In re TLI Communications LLC Patent Litigation, 823 F.3d 607 (Fed. Cir. 2016), in which the Federal Circuit held patent-ineligible claims to “assigning ‘classification data,’ such as timestamps or dates, to digital images, sending the images to a server, extracting the classification data, and having the server take the classification data into consideration when storing the digital images.” According to the majority, the claims in Content Extraction and TLI “were not directed to an improvement in computer functionality, which separates the claims in those cases from the claims in the current case.”

The majority concluded that “[c]onfiguring the memory system based on the type of processor connected the memory system is the improvement in computer technology to which the [’740] claims are directed. Alice requires no more from the claims or the specification to support our conclusion that the claims are not directed to an abstract idea.” Because the majority determined that the ’740 claims met the standard for patent eligibility under Alice step one, it did not analyze Alice step two.

Judge Hughes dissented, arguing that, “[u]nder the majority’s reasoning, many patent ineligible computer-implemented inventions could be described as non-abstract because they purport to ‘improve’ a computer despite requiring someone else to provide all the innovation.”

As to Alice step one, Judge Hughes argued that he did not believe “that the claims could be described at a lower level of abstraction than categorical data storage” and that “the ’740 claims are not directed to a specific means or method of implementing the ‘programmable operational characteristic.’” Judge Hughes explained that “[t]he ‘programmable operational characteristic’ is nothing more than a black box for performing the abstract idea of storing data based on its characteristic, and the patent lacks any details about how that is achieved.” Judge Hughes noted that, although the ’740 patent “includes a microfiche appendix containing computer code….Visual Memory does not contend that the microfiche limits the claims. Therefore, considering the microfiche code would result in an inquiry that is ‘untethered from the language of the claim[s].’ Enfish, 822 F.3d at 1337.” In response, the majority asserted that it was improper for the dissent to discount the microfiche code when reviewing a dismissal under Fed. R. Civ. P. 12(b)(6), where all factual inferences must be drawn in the non-movant’s favor. The majority also asserted that “whether a patent specification teaches an ordinary skilled artisan how to implement the claimed invention presents an enablement issue under 35 U.S.C. § 112, not an eligibility issue under § 101.” The majority further asserted that the dissent’s assumption “that the ‘innovative’ effort in the ’740 patent lies in the programming required for a computer to configure a programmable operational characteristic of a cache memory” is inconsistent with the ’740 patent specification, which “makes clear that the inventors viewed their innovation as the creation of ‘a memory system which is efficiently operable with different types of host processors.’”

As to Alice step two, Judge Hughes argued that “[t]he claims refer to generic computer components and use them to perform generic computer functions....These are all routine components and functions used to ‘apply’ the abstract idea of categorical data storage in a computer environment and are not sufficient to constitute an inventive concept and transform the abstract idea into a patent-eligible invention.” The majority, however, asserted that the use of conventional computer components is not, by itself, “fatal to patent eligibility where the claims ‘are directed to an improvement in the functioning of a computer.’ Enfish, 822 F.3d at 1338.”