Federal Circuit Judges Disagree Over Contours of Section 101

The increased prominence of Section 101 in computer-related patent disputes stems from the Supreme Court case of Alice Corp. v. CLS Bank.[1]  Before Alice reached the Supreme Court, ten judges of the Federal Circuit considered the case en banc.[2]  The viewpoints of those ten judges were so thoroughly divergent that the court issued six separate opinions, and no explanation of the law garnered majority support.  The Supreme Court’s subsequent decision resolved some of the circuit judges’ disagreements, but other disagreements persist and new ones are starting to appear.

Different panels of the Federal Circuit give seemingly different accounts of the governing law, and litigants are left to guess what standard should be applied.  Uncertainty is expected in developing areas of the law due to questions that remained unanswered by previous opinions, but the uncertainty surrounding Section 101 is different.  The questions have been answered several times over, but the answers are seemingly contradictory.

A.   Preemption

The Supreme Court explained in Alice that the judicially created exceptions to patent eligibility under Section 101 are driven by concerns over preemption.  Abstract ideas and natural laws are the basic building blocks of human ingenuity, and patent claims that broadly preempt the use of those tools—out of proportion to the contribution by the inventor to the field—would tend to impede innovation rather than promote it.  But in the wake of Alice, the Federal Circuit has been unclear about whether courts considering patent eligibility should attempt to evaluate preemption directly or whether the question of preemption is inherently resolved by application of Alice’s two-step framework. 

In OIP Technologies, for example, the Federal Circuit found the claims were directed to the concept of offer-based price optimization, which it considered an abstract idea.  With respect to preemption, the Federal Circuit explained: “that the claims do not preempt all price optimization or may be limited to price optimization in the e-commerce setting do not make them any less abstract.”[3]  The Federal Circuit offered similar guidance in Ariosa Diagnostics, where the claims at issue were directed to a method for performing a prenatal diagnosis on a maternal blood sample.  With respect to preemption, the Federal Circuit observed that “questions on preemption are inherent in and resolved by the § 101 analysis,” and “[w]hile preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.”[4]

More recently, however, the Federal Circuit analyzed patent eligibility in McRo by evaluating preemption directly.  The claims at issue recited methods of automatically performing lip synchronization for three-dimensional animated characters.  The district court had determined that the claims were “drawn to the [abstract] idea of automated rules-based use of morph targets and delta sets for lip-synchronized three-dimensional animation.”  The Federal Circuit disagreed, finding that the claims were not directed to any abstract idea, because they were limited to rules with specific characteristics.  The court explained that the claims did “not preempt approaches [to automating lip synchronization] that use rules of a different structure or different techniques” than those claimed.[5]  While the court cited part of its earlier opinion in Ariosa, it did not explain why it chose to take a different approach to analyzing preemption in McRo.

B.   Tangibility

McRo also departed from prior Federal Circuit analysis of Section 101 when it reasoned that the processing of intangible data to create more intangible data is not abstract.  The panel in McRo acknowledged that “the result [of the method claim there] may not be tangible,” but dismissed this potential concern, stating that “the concern underlying the exceptions to § 101 is not tangibility, but preemption.”[6]

In contrast to McRo, several other cases, such as Ultramercial and Electric Power, had seemed to set forth a rule that a claim to manipulating intangible data is per se abstract.  In Ultramercial, for example, the Federal Circuit considered claims directed to methods for monetizing and distributing copyrighted products over the Internet.  The panel found that the claims recited an abstraction, defining an “abstraction” as “an idea, having no particular concrete or tangible form.”[7]  Likewise, the panel in Electric Power explained that “[i]nformation as such is intangible” and that the Federal Circuit therefore treats collecting, analyzing, and presenting information as abstract ideas.[8]  Thus, different Federal Circuit panels have taken divergent views of whether intangible data processing operations are necessarily abstract.

C.   Functional Claiming

Several Federal Circuit cases have found that claims are directed to abstract ideas when they merely recite a function rather than specifying a particular way of accomplishing that function.  For example, the panel in Affinity Labs v. Amazon stated: “[The claims at issue] do no more than describe a desired function or outcome, without providing any limiting detail that confines the claim to a particular solution to an identified problem.  The purely functional nature of the claim confirms that it is directed to an abstract idea, not to a concrete embodiment of that idea.”[9]  Likewise, the panel in Internet Patents found a claim ineligible where the essential claim element of “maintaining state” described “the effect or result dissociated from any method by which maintaining the state is accomplished.”[10]  In contrast, the panel majority in Amdocs rejected the dissent’s conclusion that a claim was directed to an abstract idea because it recited “a desired goal (i.e., a ‘result or effect’), absent structural or procedural means for achieving that goal.”[11]  Thus, different Federal Circuit panels have taken divergent views of whether purely functional claim limitations are abstract.

Conclusion

Litigants should consider whether the areas of diverging rationales described above will affect their cases.  Some patent claims are so clearly eligible or ineligible that the outcome of the eligibility analysis likely will not change as the Federal Circuit’s Section 101 jurisprudence continues to develop.  But for patent claims where eligibility turns on one of the evolving areas of Section 101 analysis discussed above, litigants should recognize that the outcomes of their appeals are yet uncertain, even if some Federal Circuit case law seems to clearly favor their position.  Moreover, patent applicants would be wise to consider the diverging rationales discussed above from both sides when making claim amendments, and to make arguments for patentability on more than one basis to hedge against uncertainty in the case law.