By Bruce Sunstein. A member of our Patent Practice Group
The Federal Circuit has added another decision to a series of recent decisions (reported here last month) making it less difficult to overcome challenges to software patents, although the Supreme Court’s 2014 decision in Alice v. CLS Bank remains an obstacle to patenting many computer-implemented inventions.
In Alice, the Supreme Court adopted a two-step process for evaluating patent eligibility. Under step one, a court is to determine whether the claims at issue are directed to an abstract idea. If so, under step two, the court will next “examine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.”
In Aatrix Software, Inc. v. Green Shades Software, Inc., decided February 14, 2018, the Federal Circuit reversed a trial court’s patent invalidity determination based on Alice. The case involved a pair of patents directed to systems and methods for designing, creating, and importing data into a viewable form on a computer so that a user can manipulate the form data and create viewable forms and reports.
These patents described and claimed a data processing system having three main components: a form file (to model the physical characteristics of an existing form), a data file (to allow data from third-party applications to be “seamlessly imported” into the form file program to populate the form fields), and a viewer (to generate a report by merging the data in the data file with the fields in the form file, performing calculations on the data, and allowing the user to review and change the field values).
The trial court had ruled, on a motion to dismiss the patent owner’s complaint, that claim 1 of one of the patents was not directed to any tangible embodiment and so not directed to eligible subject matter. It also ruled that the other claims, under Alice step one, were directed to the abstract idea of “collecting, organizing, and performing calculations on data to fill out forms: a fundamental human activity that can be performed using a pen and paper.” Moreover, under Alice step two, the trial court found that the claim elements do not supply an inventive concept.
In response to this ruling, Aatrix asked permission to amend its complaint to supply additional allegations and evidence that would overcome the dismissal based on Alice. The trial court denied this motion.
On appeal, the Federal Circuit held that the trial court erred in holding claim 1 ineligible as directed to intangible matter and should have instead analyzed that claim under the two-step procedure specified by Alice. Further, the trial court’s refusal to permit an amended complaint was erroneous because at that stage there were allegations of fact that, if Aatrix’s position were accepted, would preclude the dismissal. Specifically, part two of the Alice test is satisfied when the claim limitations “involve more than performance of well-understood, routine, and conventional activities previously known to the industry.” More...
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