The Post-Alice Environment for US Software Patents
Approximately two years ago, the US Supreme court in the Alice decision considered the in principle patentability of software patents. Since then, gaining US software patents has been very difficult. In 2016, the United States Court of Appeals for the Federal Circuit (the ‘Court’) has considered numerous appeals from district courts relating to patentable subject matter. This blog post discusses the two-step test from the Alice decision and how the test was applied by the Court in 2016, the developing trends for patentable subject matter in the US as it relates to software patents and the take-away messages for 2017.
Alice two-step test
Alice was a 2014 decision by the US Supreme Court relating to patentable subject matter. The two-step Alice test (also referred to as the Mayo test) is now applied to every software patent to determine patent-eligibility. The two-step Alice test is set-out below:
- Is the claimed invention directed to a patent-ineligible concept (e.g. an abstract idea)? If no, the invention is patent-eligible.
- If the answer is ‘yes’ to step 1, does the claimed invention include an additional element, or combination of elements, that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself?
Do the decisions impact Australian patent applicants?
Understanding how the Court is applying the two-step Alice test is vital for Australian patent attorneys. Firstly, most Australian companies want to pursue IP rights in the US. Therefore, it is imperative that patents, in particular patents for inventions that could be considered ‘abstract ideas’, are drafted in a way that increases the probability that they will stand up to scrutiny by the US Patent Office (the ‘USPTO’) during prosecution and US Courts during litigation. Secondly, while Australian patent law is distinct from US patent law, there is no doubt that developments in US patent law influences both Australian Courts and Australian Patent Examiners during prosecution of patents at the Australian Patent Office. An analogous two-step process has not been set out by the Australian Courts and is not acknowledged during examination at the APO. However, it could be argued that the recent decision of the Full Court in RPL Central referenced a similar test.
How is the US Court interpreting the Alice test and what factors are considered?
In the 2016 decisions, the Court characterised the specific steps of the Alice test in Enfish, McRO and Electric Power Group. Step 1 of the Alice test requires that the claims be considered in their entirety to ascertain whether their ‘character as a whole’ is directed towards excluded subject matter. For example, the Court determined in Enfish that filtering internet content (i.e. ‘deciding who gets to see what’) is an abstract idea, whereas lip synchronisation for 3D animated characters in McRO is not. Step 2 of the Alice test requires a more in-depth analysis of the claim integers to determine whether they identify an 'inventive concept' in the application of the otherwise ineligible matter.
In determining that filtering internet content (Bascom) and self-referential tables for a database (Enfish) are patent-eligible, the Court considered that both improved the functionality of computer systems. In Enfish, the Court was influenced by the specification, which disclosed that the indexing technique allowed for faster searching of data and more effective storage of data. ‘Improvements to computer functionality’ was subsequently revisited in later decisions where the Court held that classifying an image and storing the image based on the classification (TLI Communications), anonymous loan shopping (Mortgage Grader), and collecting information, analysing it, and displaying results for an electric power grid (Electric Power Group) did not improve computer functionality and were not patent-eligible.
Pre-emption played a large role in the favourable outcome for the patentee, McRO, when the Court determined that lip synchronisation for 3D animated characters (McRO) is patent-eligible. Helpfully for McRO, the claims define specific rules required to produce lip synchronisation. Therefore, the claims do not pre-empt any automated method of lip synchronisation. The claims define the specific method for producing a particular effect, not for the effect itself. In other words, the claims were not overly broad and directed towards a desired result. The decision of the Court in McRO (along with a similar decision in Amdocs) can be contrasted with Electric Power Group, where the claims were directed towards the desired effect and not a specific method of producing the effect. The Court criticised the claims considered in Electric Power Group as being overly broad and aspirational, commenting that “there is a critical difference between patenting a particular concrete solution to a problem and attempting to patent the abstract idea of a solution to the problem in general."
In McRO, the Court helpfully stated that “processes that automate tasks that humans are capable of performing are patent eligible if properly claimed”. However, it is clear from the decisions in Mortgage Grader, OIP Technologies and Intellectual Ventures, that considerable care must be taken in drafting such claims as the computerisation / automation of known processes is generally not patent-eligible.
What are the take-away messages?
Overly broad, aspirational, result directed claims will be treated harshly. Claims to an effect / result that pre-empt other methods of achieving the same effect are unlikely to pass the Alice test. This is interesting, in that S112 considerations (similar to Australia’s Section 40 requirements) are taken into account when assessing patentable subject matter.
When considering step 2 of the Alice test, the Court consistently indicated that the claims are assessed to identify an 'inventive concept' in the application of the ineligible matter. The automation of known processes will generally fail the ‘inventive concept’ threshold and thus step 2 of the Alice test. The requirement to identify an inventive concept is interesting, in that S103 (inventive step) considerations are taken into account when assessing patentable subject matter. This has been a constant gripe of Australian patent attorneys in the IT space, who (generally) think that ‘inventiveness’ should be considered independently of subject matter patent-eligibility.
European style technical problem / technical solution arguments seem to be useful, both during drafting and prosecution of an application. In other words, when drafting, it appears to be useful to detail the technical problems associated with the prior art and the proposed technical solution to aid in the identification of an “inventive concept” and transformation of the claims directed towards abstract ideas into patent-eligible subject matter. This goes against recent US and Australian drafting practice, where every attempt was made not to discuss the prior art or problems associated with the prior art for fear that it may weaken the ‘inventiveness’ of the claims (i.e. the described problem may be seen to be common general knowledge and once described, the solution may seem obvious).