Troutman Sanders Federal Circuit Review – June 20, 2014

By Troutman Sanders LLP

Jun 23, 2014

Each week, Troutman Sanders’ Federal Circuit review summarizes the Federal Circuit precedential patent opinions from the prior week.

This week:

Supreme Court Finds Claims to an “Abstract Idea” are Ineligible Subject Matter But Does Not Resolve Debate over Software Patents
Board Should Have Considered Combination of References As New Ground of Rejection in Reexam
Choice to File Terminal Disclaimer Was Not “Error” Under Reissue Statute
Disclosing an “Entire Class” of Algorithms is Not Sufficient Structure for Means-Plus-Function Claims

SPECIAL EDITION – IMPORTANT U.S. SUPREME COURT CASE

Supreme Court Finds Claims to an “Abstract Idea” are Ineligible Subject Matter But Does Not Resolve Debate over Software Patents

Alice Corp. Pty. v.CLS Bank International, No. 13-298, 2014 U.S. LEXIS 4303 (U.S. June 19, 2014) (Thomas, J.). Click here for a copy of the opinion.

On Thursday the Supreme Court issued a highly anticipated opinion addressing whether Alice Corp.’s claims relating to a computerized scheme for mitigating “settlement risk” were eligible subject matter under 35 U.S.C. § 101. The Court affirmed the Federal Circuit and district court below, and unanimously answered: “No.” The particular claims in dispute were drawn to an abstract idea, without additional features to implement the idea in a patent-eligible embodiment. The Court did not provide much additional guidance, nor a comprehensive test for “abstract ideas,” when analyzing claims in other cases.

CLS Bank sued Alice Corp. in 2007 for a declaratory judgment that Alice Corp.’s patent claims were invalid, unenforceable, or not infringed. The district court granted summary judgment to CLS Bank in 2011, holding that all the claims are patent ineligible because they were directed to the abstract idea of “employing a neutral intermediary to facilitate simultaneous exchange of obligations to minimize risk.” Slip op. at 3–4 (quoting 768 F. Supp. 2d 221, 252 (D.D.C. 2011)). After a divided panel of the Federal Circuit reversed, the en banc Federal Circuit affirmed the district court —producing seven different opinions from the ten judges, with none but the one-paragraph per curiam opinion garnering a majority of votes.

Some observers hoped the Supreme Court would adopt a sweeping new framework to analyze whether patent claims are drawn to abstract ideas. The Court instead applied the general framework it recently set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. ___, 132 S. Ct. 1289, 182 L. Ed. 2d 321 (2012). Under that test, the Court determines first whether the claims at issue are directed to laws of nature, natural phenomena, and abstract ideas. Second, if an abstract idea is presented, “we then ask, ‘what else is there in the claims before us?’ To answer that question we consider the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.” Slip op. at 7 (citations omitted) (quoting Mayo, slip op. at 8–10). Here, the Court answered the first question by finding that “the concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce,” id. at 9 (internal quotation marks omitted), and found “no meaningful distinction” between the concept of intermediated settlement here and the concept of risk hedging found to be an unpatentable abstract idea in Bilski v. Kappos, 561 U.S. 593 (2010), id. at 10. The court declined to “delimit the precise contours of the ‘abstract ideas’ category,” however because the claims here were “squarely within the realm” of abstract ideas. Id.

As to the second question, the Court held that the method claims at issue “amount to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer. Id. at 15 (quoting Mayo, slip op. at 10). The system claims failed for the same. They were “no different from the method claims in substance.” Accordingly, the Court held that all claims were invalid under § 101 and affirmed the judgment of the Federal Circuit.

Board Should Have Considered Combination of References As New Ground of Rejection in Reexam

Q.I. Press Controls, B.V. v. Lee, No. 2012-1630, -1631, 2014 U.S. App. LEXIS 10624 (Fed. Cir. June 9, 2014) (Lourie, J.). Click here for a copy of the opinion.

Q.I. Press Controls (QI Press) initiated inter partes reexamination of cross-appellant Quad/Tech.’s patent relating to a visual inspection system for printing presses. The examiner rejected all claims as amended during the reexam. On appeal, the Board of Patent Appeals and Interferences reversed the written description rejections, reversed the obviousness rejections of some claims, and affirmed the obviousness rejections of other claims. The parties cross-appealed to the Federal Circuit.

The Court affirmed in part, reversed in part, and remanded. First, the Court affirmed the Board’s conclusion that claims 61–72 were obvious because a person of skill in the art would have been motivated “in seeking alternatives to a single high intensity light,” disclosed in one reference, and “to increase the number of light sources and utilize LEDs” as taught in a second reference. Second, the Court affirmed the Board’s conclusion that claim 18 was invalid “due to an inadequate written description because the written description does not disclose a physically unsupported substrate at the point of illumination.” With regard to claims 1–60, the Court concluded that the Board should have observed the similarity of these claims to rejected claims 61–72, and should have analyzed whether the same combination of references would have made claims 1–60 obvious. More generally, Board should have issued a new ground of rejection, if appropriate, even though the examiner had not done so. The Court vacated the Board’s decision that claims 1–60 were nonobvious and remanded that portion of the judgment for further proceedings. Finally, the Court affirmed the Board’s conclusion that claims 14 and 24 were not invalid for inadequate written description because the figures of the patent were sufficient to show the disputed features.

Choice to File Terminal Disclaimer Was Not “Error” Under Reissue Statute

In re Dinsmore, No. 2013-1637,2014 U.S. App. LEXIS 10708 (Fed. Cir. June 10, 2014) (Taranto, J.). Click here for a copy of the opinion.

Mark Dinsmore and David Caruso are the inventors of the ’568 patent, and twX, LLC is the sole assignee. During prosecution of the ’568 patent, the examiner rejected some claims on the ground of nonstatutory obviousness-type double patenting over claims of the ’086 patent, which lists Mr. Dinsmore as the sole inventor and Carl Zeiss as the sole assignee. Dinsmore and Caruso filed a terminal disclaimer in the ’568 patent application, disclaiming any term beyond expiration of the ’086 patent. They also narrowed all the claims to overcome other prior art rejections. Later, the inventors applied to reissue all claims of the ’568 patent under 35 U.S.C. § 251, seeking (initially) to remove the terminal disclaimer. The examiner rejected the reissue application because the “error” identified in the inventors’ reissue declaration was not one that could support reissue. The Board affirmed, concluding that the “voluntary and intentional filing of a terminal disclaimer” was “not an ‘error’ correctible by reissue” under § 251. Slip op. at 5.

The Federal Circuit agreed with the Board and affirmed. The applicants argued that because the two patents were never commonly owned, the recorded terminal disclaimer was ineffective and invalid, so its filing was “error” within the meaning of § 251. The Court disagreed, and began by explaining that the terminal disclaimer merely promises that the ’568 patent shall only be enforceable “during such period that it and the prior patent [i.e., the ’086 patent] are commonly owned. Id. at 7 (alteration in original), and the terminal disclaimer was valid because the “applicants identify nothing that was missing that was required or anything included that was forbidden.” The Court then characterized the applicants’ reissue declaration as “ultimately no more than a statement of now-regretted choice, because the applicants identify no cognizable false or deficient understanding . . . that underlay the choice” to file the terminal disclaimer. Id. at 8. Accordingly, the Court held that the applicants’ reissue application did not meet the “error” requirement of § 251 and affirmed the Board’s decision.

Disclosing an “Entire Class” of Algorithms is Not Sufficient Structure for Means-Plus-Function Claims

Triton Tech of Texas, LLC, No. 2013-1476,2014 U.S. App. LEXIS 10997 (Fed. Cir. June 13, 2014) (Moore, J.). Click here for a copy of the opinion.

Triton sued Nintendo alleging that the Wii Remote™ used in combination with a related accessory infringes Triton’s patent directed to an input device for a computer. Each asserted claim recites an “integrator means,” which the district court held, in its claim construction order, was indefinite because the written description did not disclose an algorithm for performing the recited integrating function.

The Federal Circuit affirmed. While Triton conceded that its claims recited means-plus-function terms that required a corresponding algorithm, it contended that the specification disclosed an algorithm with enough specificity because “numerical integration” was well known to skilled artisans. The Court rejected this proposition because the term “numerical integration” refers to “an entire class of different possible algorithms used to perform integration” rather than the necessary step-by-step procedure for performing the claimed function. Slip op. at 6. Even if a person of skill in the art “might be able to choose an appropriate numerical integration algorithm . . . the patent discloses no algorithm at all.” Id. at 7. Thus, the asserted claims were invalid as indefinite. The Court also held that Triton waived its other arguments because they were not presented to the district court. Accordingly, the Court affirmed the district court’s judgment.

The following opinions are not reported in this newsletter:

Allergan, Inc. v. Apotex, Inc., No. 2013-1245, -1246, -1247, 2014 U.S. App. LEXIS 10710 (Fed. Cir. June 10, 2014) (Prost, C.J.) (affirming that asserted patents were not anticipated; holding the district court erred by not considering “the appropriate scope of the ’029 patent’s claimed invention in evaluating the reasonable expectation of success and secondary considerations”; reversing that the patent was not obvious, reversing that the ’404 patent was conceived before the publication of two references, reversing that the patent was not invalid for obviousness; and vacating the injunction predicated on infringement of these patents). Click here for a copy of the opinion.

Bristol-Myers Squibb Co. v. Teva Pharmaceuticals USA Inc., No. 2013-1306, 2014 U.S. App. LEXIS 10911 (Fed. Cir. June 12, 2014) (Chen, J.) (affirming district court’s conclusion that patent was obvious because “a skilled artisan would have selected 2’-CDG as a lead compound and made the minor modification to arrive at entecavir,” and concluding there was no clear error in the district court’s findings that although commercial success, long-felt need, and evidence of unexpected properties cut in favor of nonobviousness, this was not enough to overcome strong evidence of obviousness). Click here for a copy of the opinion.

Each week, we succinctly summarize the preceding week of Federal Circuit precedential patent opinions. We provide the pertinent facts, issues, and holdings. Our Review allows you to keep abreast of the Federal Circuit’s activities – important for everyone concerned with intellectual property. We welcome any feedback you may provide.

– Joe Robinson, Ryan Schneider, Bob Schaffer, Nicole Sullivan, and Warren Thomas

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