Friday, April 28, 2017

At CAFC, Nintendo wins 101 judgment on the pleadings

This was an "Alice" case:

In March 2015, Nintendo filed a motion for judgment
on the pleadings, asserting that the claims were ineligible
under 35 U.S.C. § 101. Section 101 provides that
“[w]hoever invents or discovers any new and useful process,
machine, manufacture, or composition of matter, or
any new and useful improvement thereof, may obtain a
patent therefor . . . .” There is an exception to that general
principle: subject matter directed to laws of nature,
natural phenomena, or abstract ideas is not patenteligible.
Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347,
2354 (2014). The Supreme Court has established a two-
step test to determine whether patent claims are directed
to ineligible subject matter. In the first step, “we determine
whether the claims at issue are directed to one of
those patent-ineligible concepts.” Id. at 2355. If the
answer in step one is yes, “we then ask, ‘[w]hat else is
there in the claims before us?’” Id. (quoting Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289,
1297 (2012)). In other words, step two asks whether the
patent claims an “‘inventive concept’ sufficient to ‘transform’
the claimed abstract idea into a patent-eligible
application.” Id. at 2357 (quoting Mayo, 132 S. Ct. at
1294, 1298).


Under the first step of Alice, we decide whether the
claims are directed to ineligible subject matter, such as an
abstract idea. McRO, 837 F.3d at 1312; Internet Patents
Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed.
Cir. 2015). The inquiry often is whether the claims are
directed to “a specific means or method” for improving
technology or whether they are simply directed to an
abstract end-result. McRO, 837 F.3d at 1314. If the
claims are not directed to an abstract idea, the inquiry
ends. Thales Visionix Inc. v. United States, 850 F.3d
1343, 1349 (Fed. Cir. 2017).


We find that claim 1 is directed to the abstract idea of
encoding and decoding image data. It claims a method
whereby a user displays images on a first display, assigns
image codes to the images through an interface using a
mathematical formula, and then reproduces the image
based on the codes. See J.A. 35 (col. 1 ll. 23–40). This
method reflects standard encoding and decoding, an
abstract concept long utilized to transmit information. Cf.
Intellectual Ventures I LLC v. Capital One Fin. Corp., 850
F.3d 1332, 1340–41 (Fed. Cir. 2017) (organizing, displaying,
and manipulating data encoded for human- and
machine-readability is directed to an abstract concept).
Morse code, ordering food at a fast food restaurant via a
numbering system, and Paul Revere’s “one if by land, two
if by sea” signaling system all exemplify encoding at one
end and decoding at the other end. Even the ’303 patent
describes “a common technique for synthesizing single
images of faces involv[ing] horizontally dividing the image
of a face into bands for different features,” such that
“[p]aper strips containing exemplary features [can] then
be combined to form a composite drawing of a face.” J.A.
27 (col. 1 ll. 37–43).

RecogniCorp invokes Diamond v. Diehr, 450 U.S. 175
(1981), to support its argument that claiming the use of a
mathematical formula does not necessarily render a
patent ineligible. RecogniCorp is correct. In Diehr, the
Supreme Court held that despite a method claim’s recitation
of a mathematical formula, “a physical and chemical
process for molding precision synthetic rubber products
falls within the § 101 categories of possibly patentable
subject matter.” Id. at 184. In confirming patentability,
the Supreme Court focused not on the presence of a
claims as a whole. Id. at 192 (“[A] claim containing a
mathematical formula” satisfies § 101 when it “implements
or applies that formula in a structure or process
which, when considered as a whole, is performing a function
which the patent laws were designed to protect.”).
Here, the relevant inquiry does not turn one way or the
other just on claim 1’s use of multiplication. See J.A. 35
(’303 Reexamination Certificate, col. 1 ll. 34–38). Rather,
the focus is on the claim as a whole. Diehr is distinguishable
because, outside of the math, claim 1 of the ’303
patent is not directed to otherwise eligible subject matter.
Adding one abstract idea (math) to another abstract idea
(encoding and decoding) does not render the claim nonabstract.
RecogniCorp argues that, as in Enfish, “the district
court mischaracterized the invention using an improperly
high level of abstraction that ignored the particular
encoding process recited by the claims.” Appellant’s Op.
Br. 11. In Enfish, we warned that “describing the claims
at such a high level of abstraction and untethered from
the language of the claims all but ensures that the exceptions
to § 101 swallow the rule.” 822 F.3d at 1337. But
the district court did not make that mistake regarding the
’303 patent. The claims of the ’303 patent are clearly
directed to encoding and decoding image data. Unlike
Enfish, claim 1 does not claim a software method that
improves the functioning of a computer. See id. It claims
a “process that qualifies as an ‘abstract idea’ for which
computers are invoked merely as a tool.” Id. at 1336.

Step 2:

We proceed to the second step of Alice because the
’303 patent claims are directed to an abstract idea.


RecogniCorp argues that the claims of the ’303 patent
contain an inventive concept sufficient to render them
patent-eligible. Specifically, it contends that the combination
of claim elements, i.e., the “particular encoding
process using the specific algorithm disclosed” in the
patent “transforms” the abstract idea into a patentable
invention. RecogniCorp also points out the “facial feature
element codes” and “pictorial entity symbols” disclosed in
the ’303 patent claims. We find that these claim elements
do not transform the nature of the ’303 patent claims into
a patent-eligible application. McRO, 837 F.3d at 1312.

In DDR Holdings, LLC v., L.P., we found
that the patent claims satisfied Alice step two because
“the claimed solution amounts to an inventive concept for
resolving [a] particular Internet-centric problem.” 773
F.3d 1245, 1259 (Fed. Cir. 2014). Claim 1 of the ’303
patent contains no similar inventive concept. Nothing
“transforms” the abstract idea of encoding and decoding
into patent-eligible subject matter. Alice, 134 S. Ct. at
2357. Nor does the presence of a mathematical formula
dictate otherwise. Claims that are directed to a nonabstract
idea are not rendered abstract simply because
they use a mathematical formula. Diehr, 450 U.S. at 187.
But the converse is also true: A claim directed to an
abstract idea does not automatically become eligible
merely by adding a mathematical formula. See, e.g.,
Clarilogic, Inc. v. FormFree Holdings Corp., __ F. App’x
__, 2017 WL 992528, at *3 (Fed. Cir. Mar. 15, 2017). As
we explained above, claim 1 is directed to the abstract
idea of encoding and decoding. The addition of a mathematical
equation that simply changes the data into other
forms of data cannot save it.

In BASCOM Global Internet Services, Inc. v. AT&T
Mobility LLC, the patent owner “alleged that an inventive
concept can be found in the ordered combination of claim
limitations that transform the abstract idea of filtering
content into a particular, practical application of that
abstract idea.” 827 F.3d 1341, 1352 (Fed. Cir. 2016). We
found the allegation sufficient to survive a motion to
dismiss, where all facts had to be construed in the patent
owner’s favor. Id. Here, RecogniCorp has not alleged a
particularized application of encoding and decoding image
data. Indeed, claim 1 does not even require a computer;
the invention can be practiced verbally or with a telephone.
J.A. 28 (col. 4 ll. 59–63); J.A. 32 (col. 11 ll. 53–59).
Independent claim 36 claims the use of a computer, but it
does exactly what we have warned it may not: tell a user
to take an abstract idea and apply it with a computer.

Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306,
1332 (Fed. Cir. 2015).
In sum, the claims of the ’303 patent lack an inventive
concept that transforms the claimed subject matter from
an abstract idea into a patent-eligible application. Alice,
134 S. Ct. at 2357.


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