Enfish, LLC v. Microsoft Corp2016 U.S. App. LEXIS 8699 (Fed. Cir. 2016)

This rare decision bucks the current US trend of invalidating software patents as mere abstract theorems as started by the decision in Alice Corp Pty Ltd v. CLS Bank Int’l, 573 U.S. __ (2014) (“Alice”).

In the U.S., the case stands for the proposition that innovations in software may be patent-eligible, so long as the innovation does not pertain to an abstract idea for which a computer is used “merely as a tool.”

In this case, the United States Court of Appeals for the Federal Circuit (“CAFC”) reversed the decision of the district court in part, finding that the claims at issue were patent-eligible as being directed to “an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.” [pg. 12] The CAFC also reversed the finding that the claims were anticipated, but affirmed the district court’s decision that there was no infringement. [pg. 30]

The ‘604 and ‘775 Patents

Enfish, LLC (“Enfish”) is the owner of U.S. Patent No. 6,151,604 (“the ‘604 Patent”) and U.S. Patent No. 6,163,775 (“the ‘775 Patent”), both of which pertain to an innovative logical model for a computer database. [pg. 2] Unlike conventional logical models, Enfish’s patented models, described as “self-referential”, include all data entities in a single table, with column definitions provided by rows in that same table. [pg. 3]

Enfish initiated a suit against Microsoft Corp. (“Microsoft”), alleging that Microsoft’s ADO.NET product, which provides an interface for software applications to store, retrieve and manipulate data stored in a database, infringed the ‘604 and ‘775 Patents. [pg. 8] The district court entered summary judgment, finding that the five claims at issue were invalid on the grounds of unpatentable subject matter, four claims were invalid on the grounds of anticipation, and there was no infringement. [pg. 8] Enfish appealed each of these findings.

Patent-Eligible Subject Matter: Software Innovations Not Inherently Abstract

In determining patent eligibility, the CAFC applied the two-part test articulated by the Supreme Court of the United States in Alice (PCK Reporter Summary available Here), referred to as the Mayo/Alice inquiry. [pg. 9] The first step requires determining whether the claims at issue are directed to a patent-ineligible concept, such as an abstract theory, and if so, the second step requires determining if the additional elements of the claims transform the nature of the claims into a patent-eligible application. [pg. 9]

The CAFC did not read Alice to hold that all improvements in computer-related technology are inherently abstract and found that software can make non-abstract improvements to computer technology, just as hardware improvements can. [pg. 11] As such, the question asked at the first step of the test was whether the focus of the claims is on the specific asserted improvement in computer capabilities or an abstract idea for which computers are merely used as a tool. [pg. 11] While the district court found that the focus of the claims pertained to the abstract idea of “storing, organizing, and retrieving memory in a logical table,” the CAFC disagreed. [pg. 14] The CAFC found the claims at issue were directed to a specific implementation of a solution to a problem in the software arts, and it was not “a situation where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation”. [pg. 18] As it was determined that the claims are not directed to an abstract idea, and therefore are patent-eligible, there was no need to proceed to the second step of the Mayo/Alice inquiry. [pg. 18]

Anticipation Decision Overturned

The district court found four claims at issue to be anticipated by the Microsoft Excel 5.0 software program, with particular focus on the pivot table feature of the program. [pg. 21] The CAFC found this finding to require an inappropriately broad reading of the claims. [pg. 22] The pivot table feature, having a row in one table reference a column in another table, was deemed to use “referential tables” rather than a “self-referential table,” and as such, the pivot table does not anticipate the claims of the ‘604 and ‘775 Patents. [pg. 24-25]

No Infringement Decision Affirmed

The CAFC affirmed the district court’s finding that Microsoft’s ADO.NET product does not infringe the ‘604 Patent. It was determined that ADO.NET does not perform either step two or step three of the 3-step algorithm that was provided by Enfish for the ‘604 Patent, and therefore it does not infringe the claim at issue. [pg. 28-29]

Commentary

Patent drafters are constantly faced with challenges drafting software patent applications that withstand challenges across different jurisdictions. While difficult to provide any standard formula, a generally accepted theme has emerged, consistent with this case, that the patent application must include an inventive concept that relates to some kind of overall improvement in performance of the hardware that underlies the software.

Canadian courts have faced similar questions when determining whether software innovations are patentable subject matter. As in the U.S., mere scientific principles or abstract theorem are prohibited subject matter (see s. 27(8) of the Patent Act). The first case to assess the patentability of inventions involving software was Schlumberger Canada Ltd v Canada (Commissioner of Patents) in 1981. The Federal Court of Appeal (“FCA”) held that “the fact that a computer is … used to implement a discovery does not change the nature of that discovery”. In 2011, the FCA again considered the patentability of software in Canada (Attorney General) v Amazon.com, Inc, 2011 FCA 127. The FCA found that the “determination of subject matter must be based on a purposive construction of the patent claims.”

Following this decision, the Canadian Intellectual Property Office released practice notice Examination Practice Respecting Computer-Implemented Inventions – PN 2013-03 providing updated guidance on evaluating subject matter. Of particular importance, this notice stated, “when a computer is found to be an essential element of a construed claim, the claimed subject-matter will generally be statutory. A good indicator that a claim is directed to statutory subject-matter is that it provides a technical solution to a technical problem.”