Patent Eligibility Under Mayo/Alice “Two-Step” Test: Invoking Routine and Conventional Elements Is Not Enough

In a series of cases addressing whether inventions are eligible for patent protection under 35 U.S.C. § 101, the U.S. Supreme Court has adopted a two-step analysis. Two recent decisions by the U.S. Court of Appeals for the Federal Circuit illustrate the potentially restrictive effect of that test in two completely different technological fields.

Ariosa Diagnostics v. Sequenom

'The first decision, Ariosa Diagnostics, Inc. v. Sequenom, Inc., No. 2014-1139 (Fed. Cir. Jun. 12, 2015) concerned the discovery of cell-free fetal DNA (“cffDNA”), minute amounts of fetal DNA that circulate in the blood of a pregnant woman. The inventors discovered cffDNA in maternal blood samples, which previously had been discarded as useless, and claimed methods to amplify the trace molecules and test them using standard genetic testing procedures.

The Federal Circuit affirmed a lower court ruling that Sequenom’s claims covering methods of performing prenatal diagnosis and detecting parental inherited DNA in samples were invalid. The court applied the two-step test crafted in Mayo Collaborative Services v. Prometheus Labs., Inc., 132 S. Ct. 2347 (2014). First, the court ruled that the claims were directed to a form of naturally-occurring DNA molecule, which itself would not be patent-eligible. See Assn. for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013). Second, the claims lacked elements that either individually or as an ordered combination amounted to an “inventive concept” sufficient to transform the nature of the claims into something different from merely the ineligible cffDNA discovery. The court relied on repeated statements by the inventors that the cffDNA molecules should be amplified using conventional polymerase chain reaction (PCR) techniques and analyzed using one of several common detection protocols. The court concluded that, “Thus, in this case, appending routine, conventional steps to a natural phenomenon, specified at a high level of generality, is not enough to supply an inventive concept. . . .  The claims of the ‘540 patent at issue in this appeal are not directed to patent eligible subject matter and are, therefore, invalid.” Slip op. at 13.

The court rejected Sequenom’s argument that the claims should be valid because the newly-discovered cffDNA has many uses beyond those claimed in the patent, and thus the patent did not “preempt” future developments in the field. The court ruled that, “While preemption may signal ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.” Slip op. at 14.

As a result, the Sequenom patent is invalid even though the underlying discovery of cffDNA was undoubtedly a historic breakthrough in the field of prenatal medicine. The court noted that “groundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 inquiry.” Slip op. at 16, quoting Myriad, 133 S. Ct. at 2117. In a concurring opinion, Circuit Judge Richard Linn lamented the result, stating that the claimed diagnostic methods based on cffCNA were “truly meritorious” and should be patentable, but nonetheless are ineligible under the “sweeping” language used in the Supreme Court’s Mayo decision.

OIP Techs. v. Amazon.com

In a second decision issued on the same day, the Federal Circuit ruled that a computer-implemented process for determining optimum product prices was ineligible under § 101. OIP Technologies, Inc. v. Amazon.com, Inc., Case No. 2012-1696 (Fed. Cir. Jun. 11, 2015). The patent at issue in OIP claimed a process for automatically determining the price of a product offered for sale (such as over the internet) by testing multiple prices, collecting data on consumer response, calculating a demand curve for the product, and choosing the optimum price. The court applied the same two-step test for patent eligibility. See Alice Corp. Pty. Ltd., v. CLS Bank Int’l, 132 S. Ct. 2347 (2014) (applying Mayo two-step test to computer-implemented processes).

First, the court concluded that the use of consumer data to set product prices by calculating a demand curve is itself an ineligible abstract idea similar to the “fundamental economic concepts” found to be ineligible in previous cases, including Alice (intermediated settlement) and Bilski v. Kappos, 561 U.S. 593 (2010)(hedging against risk of commodity price fluctuation). Applying the second step of the test, the court ruled that the OIP patent claims did not provide an “inventive concept” because they only called for the use of “well-understood, routine, conventional activities,” such as the operation of a general-purpose computer and common computer and network functions. The court noted that the OIP claims were “exceptionally broad” and the patents made clear that one could perform the automated pricing method by “any sequence of instructions designed for implementation on a computer system.” Slip op. at 7. Thus, the court held that OIP’s patent was invalid as ineligible.

Conclusion

The Ariosa and OIP cases underscore the potentially restrictive effect of the Mayo/Alice two-step on patent eligibility across a variety of technologies. The key to establishing eligibility rests in drafting claims that recite a sufficient “inventive concept,” such using a specific unconventional apparatus, employing non-routine activities, or physically transforming an object. In addition, broad statements in the patent specification or prosecution history that an invention takes advantage of prior art practices, while potentially supportive of enablement, may tend to suggest that the invention lacks a sufficient inventive concept. Furthermore, although preemption of future developments in a field is one factor to be considered, it is not part of the two-step test and thus is not enough to salvage a claim that lacks a significant inventive concept.

The Federal Circuit closely follows the Supreme Court's recent ruling in Alice

Last Wednesday, the Court of Appeals for the Federal Circuit published its judgment in the case of buySAFE Inc. v Google Inc., discussing and applying the Supreme Court's recent ruling in Alice Corp. v CLS Bank. As noted by David in a previous post, in Alice the Supreme Court Justices 'ruled that claims directed to computer-implemented methods and related systems are not eligible for patenting under 35 U.S.C. § 101 unless they contain a non-conventional "inventive concept," and that a generic reference to a general purpose computer, or even "purely functional and generic" hardware components, does not make an otherwise ineligible invention patentable'.

Cloudy skies ahead!

The present case concerned the alleged infringement, by Google, of claims 1, 14, 39 and 44 of the US Patent No. 7,644,019, owned by buySAFE, which discloses a method and system designed to provide a guaranty service for online commercial transactions. In particular, independent claim 1 recites a method in which a computer program, running on a computer of a safe transaction service provider, (i) receives a request for a transaction performance guaranty service with respect to an online commercial transaction, (ii) processes such request in order to provide the guaranty service, and (iii) provides, via a computer network, the service, binding a transaction performance guaranty to the online commercial transaction involving the party that requested it. Dependent claim 14 narrows the method to a guaranty in the form of either a surety bond, a specialized bank guaranty, a specialized insurance policy, or a safe transaction guaranty. The parties agreed that the analysis of claims 1 and 14 would control the analysis of the two other claims asserted by buySAFE.

At first instance, ruling on Google's motion for judgment on the pleadings as to invalidity, the District Court for the District of Delaware had held that the asserted claims were ineligible for patent protection under 35 U.S.C. § 101. Discussing the applicability of the machine-or-transformation test (under this test, as articulated in In re Bilski, following the so-called patent-eligibility trilogy, a process claim is eligible for patent protection if (i) it is tied to a particular machine or apparatus, or (ii) it transforms a particular article into a different state or thing), the court had found that, as acknowledged by buySAFE itself, the method could potentially be performed entirely in the human mind, if the transaction was not online, and was thus ineligible for patent protection, despite its taking place online and involving use of a computer (citing CyberSource v Retail Decisions). In this perspective, the judge had observed that 'the '019 patent describes a well-known, and widely-understood concept - a third party guarantee of a sales transaction - and then applies that concept using conventional computer technology and the Internet', concluding that '[m]erely using a computer to perform more efficiently what could otherwise be accomplished manually does not confer patent-eligibility' (especially as the patent claims were not directed to any specific way of using such computer). Evaluating the abstract nature of the claims, the court had found that they were not directed to any specific device or system, nor limited to a concrete application or to any specific industry. Consequently, it had granted Google's motion for judgment on the pleadings, holding the ineligibility of the asserted claims.

On appeal, the Federal Circuit upheld the judgment of the district court, engaging in an interesting review of the interpretative paths taken by the Supreme Court in the recent Alice ruling and in the previous Mayo Collaborative Servs. v Prometheus Labs Inc. judgment. The panel observed that the Supreme Court has always interpreted § 101 as containing an important implicit exception, namely the exclusion of laws of nature, natural phenomena and abstract ideas from patent protection. It then retraced the steps taken by the Supreme Court Justices in their analysis of the three types of excluded matter, describing both the underying concern and the framework designed to evaluate patent-eligibility. The former is 'that patent law [should] not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity' (Alice, quoting Mayo), regardless of the narrowness of the law of nature, natural phenomenon or abstract idea involved. The latter excludes the patentability of claims that directly read on the three excluded matters, as well as of any claim that 'read[s] on a human-made physical thing ("machine, manufacture, or composition of matter") or a human-controlled series of physical acts ("process") [...] if (a) it is "directed to" matter in one of the three excluded categories and (b) "the additional elements" do not supply an "inventive concept" in the physical realm of things and acts - a "new and useful application" of the ineligible matter in the physical realm - that ensures that the patent is on something "significantly more than" the ineligible matter itself'.

The panel also reviewed the Supreme Court's approach to the category of abstract ideas, particularly relevant in the context of the case. In particular, it looked at two fundamental questions, respectively concerning the matter identified by the Supreme Court as falling within the mentioned category, and the cases in which the invocation of a computer in a claim is sufficient to supply an "inventive concept" that attracts patent protection:

As to the first question: The relevant Supreme Court cases are those which find an abstract idea in certain arrangements involving contractual relations, which are intangible entities. Bilski v. Kappos, 561 U.S. 593 (2010), involved a method of entering into contracts to hedge risk in commodity prices, and Alice involved methods and systems for "exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk,". More narrowly, the Court in both cases relied on the fact that the contractual relations at issue constituted "a fundamental economic practice long prevalent in our system of commerce." In simultaneously rejecting a general business method exception to patent eligibility and finding the hedging claims invalid, moreover, Bilski makes clear that the recognition that the formation or manipulation of economic relations may involve an abstract idea does not amount to creation of a business-method exception. [...] If enough extra is included in a claim, it passes muster under section 101 even if it amounts to a "business method."

As to the second question: The Court in Alice made clear that a claim directed to an abstract idea does not move into section 101 eligibility territory by "merely requir[ing] generic computer implementation." In so holding, the Court in Alice relied on Mayo for the proposition that "[s]imply appending conventional steps, specified at a high level of generality," was not "enough" to supply an "inventive concept.". Neither "attempting to limit the use of [the idea] to a particular technological environment" nor a "wholly generic computer implementation" is sufficient.

The Federal Circuit noted that the Supreme Court had found the invocation of the use of a computer in Alice's method claims, and of other components used to 'perform the basic calculation, storage, and transmission' tasks in the system claims, to be insufficient to qualify as an "inventive concept", having a mere functional, unspecified or generic function.

Applying this teaching to the case in hand, the panel concluded that '[t]he claims are squarely about creating a contractual relationship - a "transaction performance guaranty" - that is beyond question of ancient lineage'; as held at first instance, the narrowing of the idea to particular types of relationship, or to a particular technological environment, does not affect patent (in)eligibility. Similarly, the court clarified that 'the invocation of computers adds no inventive concept', as their function remains generic and unspecified, just as in Alice.