On March 1, 2017, (in a nonprecedential opinion) the court of appeals federal circuit (“CAFC”) invalidated 3 patents owned by Smartflash and asserted against Apple.  A jury found that Apple was liable for $533 in damages to Smartflash.  The CAFC threw out those damages when it found the patents ineligible.

At pages 7-8 the court laid out the relevant law and the test for patent eligibility:

     “Section 101 of the Patent Act states 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 therefore, subject to the conditions and requirements of this title.” 35 U.S.C. § 101. In interpreting this statute, the Supreme Court has held that the broad language of this provision is subject to an implicit exception for “laws of nature, natural phenomena, and abstract ideas,” which are not patentable. Alice, 134 S. Ct. at 2355.

     “To determine whether the exception applies, the Supreme Court has set forth a two-step inquiry. Specifically, courts must determine (1) whether the claim is directed to a patent-ineligible concept, i.e., a law of nature, a natural phenomenon, or an abstract idea; and if so, (2) whether the elements of the claim, considered “both individually and ‘as an ordered combination,’” add enough to “‘transform the nature of the claim’ into a patent eligible application.” Id. (quoting Mayo, 132 S. Ct. at 1298, 1297).”

At pages 9-10 the CAFC went on and applied inquiry (1) of the Alice rule:

     “In Alice, the Supreme Court explained that “fundamental economic practice[s]” and other “method[s] of organizing human activity” are not patent-eligible because they are abstract ideas. 134 S. Ct. at 2356–57. … Following this guidance, we have noted that when considering claims purportedly directed to “an improvement of computer functionality,” we “ask whether the focus of the claims is on the specific asserted improvement in computer capabilities . . . or, instead, on a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335–36 (Fed. Cir. 2016);…             

“…The district court correctly concluded that “the asserted claims recite methods and systems for controlling access to content data, such as various types of multimedia files, and receiving and validating payment data.” Smartflash, 2015 WL 661174, at *8. As such, the asserted claims are directed to the abstract idea of conditioning and controlling access to data based on payment.”

At page 12, the CAFC applied inquiry (2) of the Alice rule:

“…As such, merely storing, transmitting, retrieving, and writing data to implement an abstract idea on a computer does not “‘transform the nature of the claim’ into a patent-eligible application.” Alice, 134 S. Ct. at 2355.

“….There, we found that the claims were patent eligible because they transformed the manner in which a hyperlink typically functions to resolve a problem that had no “pre-Internet analog.” Id. at 1258. …As we noted there, the Ultramercial claims were “directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before.” Id. at 1258 (quoting Ultramercial, 772 F.3d at 715–16). Nevertheless, those claims were patent ineligible because they “merely recite[d] the abstract idea of ‘offering media content in exchange for viewing an advertisement,’ along with ‘routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet.’” Id.

Since the two step inquiry of Alice came out, my goal has been to try my best to make sure that the claims are NOT directed to an “abstract idea” but rather, try to write the claims so they are directed to a tangible result, namely “a process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” as stated in 35 §101–in this way, one can hopefully avoid the entire Alice problem.  The opinion can be found here.


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